Transition and Continuity... Dover's Unique Culture

Transition and Continuity... Dover’s Unique Culture

2004 Annual Report Transition and Continuity... Dover’s Business Philosophy

Our goal is to be the leader in every market we serve, Success demands a constant focus on product quality and to the benefit of our customers and our shareholders. innovation, and exceptional customer service. It requires a To achieve and maintain market leadership, we manage long-term orientation. according to this consistent philosophy: We enhance our market leadership and shareholder value by

G Perceive customers’ real needs and provide products acquiring like-minded businesses that strengthen our exist- and services to meet or exceed them, ing market positions and offer new markets.

G Provide better products and services than competitors,

G Invest to maintain competitive advantage, Intrinsic to Dover’s success is a decentralized management

G Expect a fair price for the extra value we add, and style that gives the greatest scope to the talented people

G Insist on the highest ethical standards at all times who manage our companies. in a business culture of trust, respect and open communication. Dover will continue to adapt to market conditions, but our philosophy, which has served shareholders well for 49 years, will not change.

Contents: Consolidated Summary of

Comparative Financial Highlights page 1 Selected Financial Data page 20 Letter to Shareholders page 2 Form 10-K Insert 11-Year Consolidated Summary of Board of Directors, Officers and

Selected Financial Data page 18 Shareholder Information IBC

Dover’s Six Subsidiaries:

Dover Diversified page 6 G

Dover Electronics page 8 G

Dover Industries page 10 G

0.20

0.16 Dover Resources page 12 G 0.12

0.08

0.04 S&P500 Dover Systems page 14 Dover G 0.00 94 95 96 97 98 99 00 01 02 03 04

Dover Technologies International page 16 G Comparative Financial Highlights 1

Results From Continuing Operations

(in thousands, except per share figures, percentages and number of employees) 2004 2003 2002 Net sales $ 5,488,112 $ 4,413,296 $4,053,593 Earnings before taxes $ 552,146 $ 371,892 $ 263,369 Net earnings $ 409,140 $ 285,216 $ 207,846 Continuing net earnings per diluted share $ 2.00 $ 1.40 $ 1.02 Dividends DIluted EPS $ 0.62 $ 0.57 $ 0.54 Capital expenditures $ 107,434 $ 96,400 $ 96,417 Acquisitions $ 514,303 $ 372,385 $ 100,138 Cash flows from operations$2.50 DIluted EPS $ 597,447 $ 577,366 $ 395,839 Return on average equity2.00 14.2% 11.5% 9.0%

Number of employees1.50 28,102 25,279 24,934 $2.50 1.00 DIluted2.00 EPS 0.50 DIluted EPS 1.50 Profitability Measures $2.50 94 95 96 97 98 991.0000 01 02 03 04 $2.50 2.00 0.50 2.00 50% 1.50 Profitability Measures 94 95 96 97 98 99 00 01 02 03 04 1.50 40 1.00 1.00 30 0.50 50% 0.50 20 Profitability40 Measures Diluted Earnings Per Shar94 95e 96 97 98 99 00 01 02 03 04 10 Profitability Measures 94 95 96 97 98 99 00 01 02 03 04 30

50%94 95 96 97 98 992000 01 02 03 04 After-Tax Operating Return On Investment Return on Stockholder’s50% Equity 40 10 40 30 94 95 96 97 98 99 00 01 EPS 30 After-Tax Operating20 Return On Investment Return on Stockholder 20 20% 10 Profitability Measure 10 16 EPS 94 95 96 97 98 99 00 01 02 03 04

12 After-Tax Operating Return On Investment Return on Stockholder’s94 95 Equity96 97 98 99 00 01 20% After-Tax Operating Return On Investment Return on Stockholder 8 16 4 EPS 12 EPS

Point to point compound annual 20%94 95 96 97 98 99 008 01 02 03 04 growth rate for 10 year periods ending S&P50020% Dover 12/31 of each year shown 16 4 Earnings Per Share Growth 16 12 11 year cumulative total return 04 Point to point compound annual 94 95 96 97 98 99 00 01 02 03 04 12 growth rate for 10 year periods ending 8 S&P500 Dover 12/31 of each year shown $400 8 4 320 11 year cumulative total return 4

Point to point compound annual 94 95 96 97 98 99 00 01 02 03 04 240 growth rate04 for 10 year periods ending $400 Point to point compound annual S&P50094 95 Dover96 97 98 99 00 01 02 03 04 12/31 of each year showngrowth rate for 10 year periods ending 160 S&P500 Dover 320 12/31 of each year shown 80 11 year cumulative total return 240 Comparison of 11-Year Cumulative Total Return* 11 year cumulative total return

*$100 invested on 12/31/94 in Dover stock or in either the S&P 500 or Industrial Machinery indices, $400 94 95 96 97 98 9916000 01 02 03 04 including reinvestment of dividends. Fiscal years ending December 31. S&P Industrial $400 S&P500 Dover 320 80 320 240 *$100 invested on 12/31/94 in Dover stock or in either the S&P 500 or Industrial Machinery indices, 94 95 96 97 98 99 00 01 240 2 Letter to Shareholders

2004 was significant for Dover Corporation. First, we had a great year, generating record sales, our second best continuing

earnings ever and our third highest acquisition spending level. Second, we announced a new organizational structure, the

first such change in 20 years. We are now organized into six subsidiaries with 13 groups of companies, which will give us

more market focus, acquisition capacity and executive leadership. And third, and perhaps most important for the future, we

achieved a smooth transition to new leadership. On January 1, 2005, Tom Reece formally passed the mantle of Chief

Executive Officer to Ron Hoffman, who had served as Dover’s President and Chief Operating Officer since mid-2003. Tom

remains Chairman of the Board. With this planned and seamless transition, Ron has now become only the fifth person to lead

Dover in the company’s 50-year history.

Sharp Rise in Earnings on record sales and Diversified also had record operating company, subsidiary and corporate Record Sales earnings. These results were posted despite levels. This new structure will enable us to We are especially gratified that Dover set a the impact of both rising steel prices and develop and apply additional management talent new sales record of $5.5 billion in 2004, after operating issues at a couple of companies. to those efforts. Within the six subsidiaries, some challenging years since 2000. For the While most companies throughout Dover were we have organized our companies into 13 year, earnings from continuing operations of affected to some degree by higher costs for groups of businesses that generally share $409 million, or $2.00 diluted earnings per materials and energy, they varied in their near some common elements such as markets share, were our second highest ever. term ability to pass on those cost increases. served, material sources, distribution channels While a resurgence in the back-end semi- or production needs and methods. In addition conductor markets and strong performance in A Structural Evolution to traditional oversight of their individual operat- the energy products companies contributed sig- Dover begins 2005 not only with new leader- ing companies, the CEOs of the six subsidiaries nificantly to this result, improving markets gen- ship but with an expanded subsidiary structure will focus on these 13 “market” groups, with erally enabled all four of Dover’s subsidiaries to that will support our future growth. From four a view to identifying synergies, sharing informa- deliver double-digit gains in sales and earnings. subsidiaries — Dover Diversified, Dover tion and extending best practices. Strategically, Despite the unsettling effects of energy price Industries, Dover Resources and Dover they will assess their served markets and volatility, Dover Resources was the clear earn- Technologies — we have evolved into six with develop long-term market strategies and ings leader, posting record earnings, up more the addition of Dover Electronics and Dover investment analyses. than 58%, and record sales, up 36%. Dover Systems. This new structure will, among other Technologies recorded strong increases in things, expand our acquisition capacity and pro- Continuity and Leadership sales, and earnings essentially doubled, despite vide more executive management leadership The remarkable continuity of Dover leadership softness in the fourth quarter. This was driven opportunities. We also believe it will result in has been highly beneficial to Dover’s sharehold- by Dover’s biggest earner in 2004, Everett improved market and customer focus. In part, ers, employees and customers alike. Like its Charles, a CBAT company whose testing busi- this expanded organization recognizes the newest CEO, each of the company’s previous ness has shown impressive growth. Both increased complexity of management oversight leaders — Fred Durham, Thomas Sutton, Gary Dover Diversified and Dover Industries had as we grow. As Dover has become more glob- Roubos and Tom Reece — was a strong al, managing effectively, making sound acquisitions and assuring that Dover’s rigorous operating standards are met, represent continuing challenges for our leadership teams at the 3

Ron Hoffman, President and Chief Executive Officer on the left, and Tom Reece, Chairman of the Board on the right.

Another long-standing Globalization: Sources and Markets Dover tradition — retaining all Where it makes sense, Dover company presi- companies acquired regardless dents have been taking advantage of lower of results during short term cost manufacturing areas as one of many “down” cycles — has also been strategies for making their businesses more modified under Tom’s leadership. competitive. This involves manufacturing com- Today, each operating company’s ponents in China, India or Eastern Europe for performance and prospects are assembly and sale in those markets or else- regularly evaluated to make sure where around the world, an approach that they continue to meet Dover’s enables our companies to maintain control over believer in Dover’s time-tested standards of profitability and long- the vital product design, development and dis- management philosophy. That philosophy, term growth. Over the past four years, Dover tribution functions. which both fosters and relies on a culture of has sold or closed 19 underperforming busi- In addition, China, India and Eastern trust and high integrity, is described again this nesses, and has acquired 33 companies whose European countries have become increasingly year on the inside front cover of this report. metrics are more consistent with Dover’s attractive markets for our companies. For At the same time, each predecessor left his strategic and financial criteria. example, a significant portion of Universal mark by helping Dover adapt to new challenges At all times, Dover has maintained a keen Instruments’ chip placement equipment is now and changing conditions in different ways. interest in employee development, with an sold to Chinese electronics manufacturers, and Under Tom Reece, who became Chief ongoing emphasis on hiring, training and retain- quite a bit of it is now assembled there as well. Executive in 1994, Dover recognized an ing talented employees. Dover considers its Imaje, which has long sold its inkjet marking increased need to emphasize growth as well as core operating company talent to be a major systems in China, opened a new manufacturing high returns on invested capital. With the asset and, with the new structure, talented facility there during the third quarter. A number added impetus of this “tilt to growth,” Dover employees will have enhanced opportunities to of Dover’s other businesses — Wilden, OPW invested some $4.3 billion in acquisitions since further their careers with the company. Our tal- Fueling Components, Tranter and Vitronics 1993, a pace that is likely to increase in the ent pool also widens and deepens with every Soltec, to name a few — are also expanding years ahead. The need for growth, whether acquisition. their activities in these markets, both as sourc- through internal initiatives or external acquisi- ing and selling opportunities. Other Dover tions, is now an integral part of Dover’s operating philosophy. 4

Evolution of Growth

1955 1985 2005

Headquarters F FF

Subsidiaries FF FFF

FF FFF

Operating Companies FF FFFFFFF FFFFFFF

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companies have benefited from these experi- 1955 1985 2004 ences as they move to establish their own pro- Sales $19.3mm $1,400mm $5,488mm duction operations to serve China’s burgeoning Earnings $1.9mm $100mm $409mm economy. Employees 500 16,000 28,000

Strong Acquisition Program We continued our vigorous acquisition program during 2004, purchasing eight add-on acquisi- overall business recovery and competition for Financial Officer of Scholastic Corporation. tions at an overall cost of $514 million. The deals from private equity firms as well as Both bring experience to our Board that we largest of these were completed during the strategic buyers. However, we are confident believe will be most beneficial. third and fourth quarters: U.S. Synthetic, a that the culture and management autonomy April 2005 will mark the retirement from the leading maker of polycrystalline diamond cut- that Dover offers will continue to prove attrac- board of Gary L. Roubos, who served as CEO ters used in drill bits for oil and gas drilling, tive to entrepreneurs and managers who wish of Dover from 1981 to 1994, and who leaves acquired by Dover Resources’ Energy Products to put their successful, growing companies in the board after 29 years as a Dover director. Group; Corning Frequency Controls, a leader in the hands of a like-minded, financially strong We will miss his wise counsel and wish him oscillators for the telecommunications, mili- corporate parent, where each one can continue well in his retirement. Also, we will miss tary/aerospace, test and instrumentation mar- to “run it like they own it.” That gives us an Dover’s legendary second CEO, Thomas C. kets, acquired by Dover Technologies’ Vectron edge with the kinds of companies we like to Sutton, who passed away near the end of (now part of Dover Electronics); and Datamax, acquire and where we continue to have suc- 2004. Please see the adjacent memorial. a leading manufacturer of barcoding and RFID cess. There were a number of other management equipment, acquired by Dover Technologies, to changes among Dover’s executive ranks in be operated in close coordination with Imaje. Further Leadership Changes 2004. Jerry W. Yochum, previously President Our acquisition activity will hopefully In December, we announced the election of and CEO of Dover Diversified, retired at year- increase during 2005, as we have a stated two new members of Dover’s Board of end. His successor in that post is William W. objective of spending between 8 and 10% of Directors effective January 1, 2005. We are Spurgeon, formerly Executive Vice President, total revenue on acquisitions. We anticipate pleased to welcome Robert W. Cremin, Dover Diversified, and before that President of that pricing will remain a challenge due to the Chairman, President and CEO of Esterline Sargent Controls & Aerospace. In October, Technologies Corporation, and Mary A. Robert A. Livingston, formerly President of Winston, Executive Vice President and Chief Vectron International, was appointed President 5

Thomas Sutton 1921—2004

Thomas C. Sutton, a former Chief Executive Officer of Dover Corporation, died on

December 29, 2004 at age 83 after a long illness. Mr. Sutton was Dover’s second and

longest-serving chief executive, holding that post from 1964 to 1980. As CEO, he was

instrumental in building Dover into a highly profitable, industrial products manufacturer. He

also maintained and reinforced the unique, decentralized corporate culture and standards of

high integrity that continue to distinguish Dover. He was a strong believer in letting the presi-

dents of Dover’s manufacturing companies operate

independently, as if they owned their companies —

indeed, requiring them to do so. This decentralized

approach continues to make Dover’s companies

highly entrepreneurial in exploiting emerging opportunities, and nimble in responding to changes in their markets. It has also made Dover a desirable acquirer for owners of successful businesses. Thomas C. Sutton Tom Reece, one of the many Dover executives who was mentored by Mr. Sutton, commented, “Tom Sutton epitomized all of the best values and traditions of Dover which still hold true today: integrity, customer focus, operating cess. With the leadership of Dover in Ron’s capable hands, Tom wishes to thank all of the excellence, relentless desire to succeed and fundamental fairness. Through his substantial Dover directors, officers and employees for accomplishments and positive influence on Dover’s culture and success, Tom has made an their support and guidance. “It has been an indelible contribution to the Dover legacy.” honor and a privilege to have worked at Dover for nearly 40 years, the last 10 as the CEO. It has been a wonderful ride and I will always be and CEO of the new Dover Electronics sub- A Promising Outlook grateful for this extraordinary opportunity.” sidiary, and Ralph S. Coppola, previously Dover’s prospects for 2005 are bright. We see Our leadership and our structure may be President of Hill PHOENIX, was named continued strength in most of our industrial new, but our approach to business and our President and CEO of Dover Systems. companies’ markets, and all of the companies determination to be the best at what we do Several new company presidents have continue to move aggressively to strengthen have not changed. We look forward to an also been appointed as a consequence of their market positions. While the percentage excellent 2005. these promotions as well as normal manage- gains in earnings we achieved in 2004 will be ment turnover. Tom Gibbons has succeeded Bill hard to match, we anticipate higher sales and Sincerely, Spurgeon at Sargent; Ray Hoglund succeeded earnings from all six of our subsidiaries in 2005. Ralph Coppola at Hill PHOENIX; and Rick Hajec Meanwhile, Dover remains in excellent succeeded Bob Livingston as head of Vectron. shape financially. Our net debt of $735 million Other changes include Bill Strenglis, recently at year-end 2004 was a moderate 19% of total Ronald L. Hoffman named President of DI Foodservice, Tom Bell, capitalization, and free cash flow, an important President and Chief Executive Officer who moved from Crenlo to lead Waukesha indicator of operating performance, was strong. Bearings, and Lance Fleming, who succeeded Cash flow from operations totaled nearly $600 Tom at Crenlo. In addition, Soma million, which was used to fund capital expendi- Somasundaram was hired as President of RPA tures of $107.4 million, pay dividends to share- Thomas L. Reece Technologies, Ian De Souza was promoted to holders of $126 million, and fund acquisitions. Chairman of the Board President of Universal Instruments, and Dave We are optimistic that Dover will continue Wightman became President of the Microwave to perform well for its shareholders, customers Products Group, consisting of the K&L and and employees around the world, whose confi- Dow-Key Microwave companies. dence and trust are so essential to our suc- 6 Dover Diversified

For 2004, the businesses in Dover Diversified generated record sales and earnings, with strong performances at Hill

PHOENIX, Sargent, Performance Motorsports, SWEP, Crenlo, Hydratight Sweeney, Mark Andy and Graphics Microsystems.

Going forward, Diversified will consist of eight companies organized into two groups: Industrial Equipment, largely based in

North America, and Process Equipment, which has a stronger presence in Europe and Asia. Under the new structure, Hill

PHOENIX, Belvac and SWF are now grouped within Dover Systems and Mark Andy is part of Dover Technologies. Many of

the companies in the “new” Diversified subsidiary are platform companies that have the potential to grow through add-on

acquisitions in related fields. While few have overlapping markets, all share best practices as well as the common goal of

expanding their global sales, manufacturing and sourcing capabilities, particularly in China and India.

Sargent makes a number of key components, like precision fasteners, valves, actuators and alignment joints, for major aircraft like the Boeing 747, and provides aftermarket MRO services for many commercial aircraft.

diversified revenuediversified revenue diversified salesdiversified sales

$750 $750 $100 $100

600 600 80

450 450 60

300 300 40

150 150 20 Revenue Operating Income ($ in millions) ($ in millions) 02 03 04 02 03 04 ($ in millions) ($ in millions) 02 03 04 (Financial information presented(Financial on the information new presented on the new (Financial information presented(Financial on the information new presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis) In Industrial Equipment, Sargent is targeting NASCAR and Formula One racing teams, are Waukesha Bearings has faced difficult 7 three commercial aircraft-related niche markets highly recognized in auto racing circles. Largely power generation markets in the U.S. and that share sales and distribution channels. for environmental reasons, the power sports Europe for its fluid film bearings, but expects to These markets include aircraft engines, for market (snowmobiles, ATVs, dirt bikes) is shift- offset that situation somewhat with improved which Sargent makes seal rings, bearings and ing from quicker two-cycle to cleaner four-cycle product penetration into the oil and gas pipeline fasteners; aircraft components and systems, engines, and PMI expects to capitalize on this transmission market. which Sargent sells to the major aircraft manu- development. U.K.-based Hydratight Sweeney performed facturers and their suppliers; and maintenance, Crenlo, which makes cabs and rollover pro- well after being split off from Waukesha during repair and overhaul work (MRO), which airlines tection bars (“ROP’s”) for agricultural and con- 2004, with strong growth in service and rental are increasingly outsourcing to third-party struction equipment, has recovered well in a of their torquing and tensioning tools to the oil providers such as Sargent. Early in 2005, strong construction market. Its Florence, South and gas, power generation, and aerospace Sargent acquired Avborne, a Miami, Florida- Carolina plant has increased volume and industries. based MRO operation, to expand significantly improved operating efficiency. Graphics Microsystems had very strong its presence in this market. Sargent’s military Diversified’s five Process Equipment busi- operating leverage on improved sales as it con- business also continues to be robust, particu- nesses are benefiting from strong oil and gas, tinued to expand its global market share for larly for such high-usage parts as bearings. and capital equipment markets. Sweden-based systems used on both OEM and retrofit printing Performance Motorsports (PMI) is enjoying SWEP’s new compact copper and nickel-brazed presses. Their color control systems can read strong North American professional racing and heat exchangers are gaining market share in and adjust colors “on the fly,” reducing waste, consumer markets for its high performance pis- Europe and are displacing older technolo- increasing productivity, and improving tons, crankshafts, connecting rods and cylinder gy used in marine engines, quality. liners, while European markets remain flat. PMI HVAC Diversified ended 2004 with a products, many of which are custom record backlog and expects further sales, earn- made for systems, pro- ings and, most importantly, margin gains in cessing plants and power 2005. This should be particularly true as the generation facilities. impact of material costs mitigates further, the Tranter’s more traditional Avborne acquisition is digested and ongoing heat exchanger products internal growth and operating initiatives begin continue to do well and are now delivering results. being manufactured and sold globally.

Dover Diversified William W. Spurgeon President and Chief Executive Officer

Industrial Equipment

PERFORMANCE MOTORSPORTS INC

Tom Gibbons Jim Johnson Lance Fleming President President President Sargent Performance Crenlo, LLC Motorsports, Inc.

Process Equipment

Nils-Gustaf Tobieson Chuck Monachello Tom Bell Don Fancher Erik Tobiason President President President President President Swep International AB Tranter PHE, Inc. Waukesha Bearings Hydratight Sweeney Graphics Corporation LTD. Microsystems, Inc. 8 Dover Electronics

The eight Dover Electronics businesses, consisting of Components and Commercial Equipment companies, delivered

increased sales and profits in 2004 on modestly improved margins, and expect further improvements in 2005.

Components is comprised of the Specialty Electronic Components (SEC) companies that were formerly part of Dover

Technologies, and Kurz-Kasch (formerly part of Dover Industries). This group generated the bulk of Dover Electronics’ sales

in 2004 but less than half of its operational earnings due to restructuring charges, significant insurance adjustments, acqui-

sition integration costs, and margins that were challenged by the continuing uncertainties of the telecom market, this group’s

largest served market. Margin improvement is a major goal for the Components group in 2005.

Dover Electronics Robert A. Livingston Triton is a leading manufacturer of President and off-premises ATMs and its products Chief Executive Officer can be found in a wide variety of locations due to lower cost, ease of installation, and user friendliness.

Components

Rick Hajec Andre Galliath Brian DuPell President President President Vectron International, Novacap, Inc. Dielectric Inc. Laboratories, Inc.

Dave Wightman Dave Wightman Neal Allread President President President K&L Microwave, Inc. Dow-Key Microwave Kurz-Kasch, Inc. Corporation Commercial Equipment

Brian Kett Jeffrey Rowe President President Triton Systems Hydro Systems Company Although the broad markets they operate in are telecommunications markets. The Microwave sees continuing growth opportunities in its tra- 9 quite large, Dover Electonics’ Components Products Group companies — K&L Microwave ditional core customer base, mainly hotels, businesses are leaders in much smaller market and Dow Key Microwave, which manufacture restaurants, hospitals and other institutions. niches, focusing primarily on high-value, non- RF and microwave filters, switches and assem- Hydro is well positioned to capture a growing commodity product areas. Vectron, which blies — serve the defense and aerospace, test percentage of business in its international mar- makes oscillators and other frequency control and telecommunications markets. Kurz-Kasch, kets such as England, Brazil, Australia and products, was a leader in the telecommunica- a manufacturer of electro-mechanical stators, China. tions sector before its September 2004 acqui- sensors and molded plastics, primarily serves Dover Electronics hopes to achieve syner- sition of Corning Frequency Controls (CFC). the heavy truck, electrical distribution, irrigation gies and benefits as the companies work This combination further strengthens its posi- and other industrial applications. together in sharing best practices and assist tion in telecommunications as well as in the mil- Triton Systems, a leading manufacturer of each other in international expansion and other itary/aerospace, test and instrumentation mar- free-standing ATM machines and software, and growth opportunities. Although some of these kets. The group’s ceramic products Hydro Systems, which makes mechanical and companies have operations in China, most companies — Novacap and electronic chemical dispensing systems, drove have limited their presence there to sales and Dielectric Laboratories — a strong 2004 performance in the Commercial technical support offices, as U.S. and European diversified revenue are also niche market lead- Equipment Group, generating a third of Dover production of these products remains highly ers, although small in rela- Electronics’ sales and more than half of its prof- cost-efficient. The same is generally true of $750 tion to the worldwide its. Triton is pursuing several avenues for con- their participation in developing markets such capacitor market, in pro- tinued growth over the coming year, including as India and Brazil. 600 viding high reliability, high further international expan- All of the Dover Electronics’ companies450

voltage, tunable and high sion, entering the anticipate improvements in 2005, while300 at the

frequency solutions to traditional bank same time, acknowledging the reality 150of market the defense and aero- ATM market and uncertainties and the restructuring and integra- ($ in millions) 02 03 04 space, medical, and expanding its tion(Financial costs information associated presented with on the the newVectron acquisi- 2005 segment basis) back-office ATM tion of CFC. service and net- diversified revenuework business. diversified sales Hydro Systems $750 $100

600 80 electronics revenue 450 60

300 40 $500 150 20 400

($ in millions) 02 03 04 ($ in millions) 300 02 03 04 (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis) 200

100 Revenue ($ in millions) 02 03 04 (Financial information presented on the new 2005 segment basis)

electronics revenue electronics sales

$500 $40

400 32

300 24

200 industries16 revenue

100 8 Operating Income $800 ($ in millions) 02 03 04 ($ in millions) 02 03 04 (Financial information presented on the new (Financial information presented on the new 640 2005 segment basis) 2005 segment basis) 480

320

10 Dover Industries

Despite significant steel price increases, Dover Industries realized record sales and improved earnings in 2004 at most of its

twelve companies. Under the new structure, Tipper Tie and DI Foodservice moved to Dover Systems, and Triton and Kurz-

Kasch transferred to Dover Electronics. The remaining eight companies, organized into two market groups, entered 2005

focused on growth through market expansion and new product opportunities.

In the Mobile Equipment group, revenues and earnings at Heil Environmental and Marathon Equipment increased in 2004,

and both are optimistic about 2005 prospects. These companies view waste management equipment as a solid-growth, high-

return market that will continue to be favorably impacted by rising recycling and transportation costs, as well as landfill clo-

sures. These companies are working to develop more efficient equipment that will enable them to capitalize on these oppor-

tunities by lowering their customers’ operating costs.

Heil Environmental manufactures a broad range of waste collection equipment, including this automated sideloader, which is very effective in residential neighborhood applications. ($ in millions) ($ in millions) 02 03 04 02 03 04 ($ in millions) ($ in millions) 02 03 04 (Financial information presented(Financial on the information new presented on the new (Financial information presented(Financial on the information new presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis)

Favorable economic conditions, including unit designed for leveling concrete on upper market focus in light of ongoing consolidation 11 increased industrial activity, is driving freight floors, which should further improve results in the auto body shop industry. growth, which helps Heil Trailer. With truck fleet in 2005. PDQ is also expanding the market for its capabilities tight, this liquid and dry bulk market In the Service Equipment group, Rotary Lift touch-free car wash systems through a catego- leader had a strong 2004, and 2005 looks very was hit hard in 2004 by fast-rising steel prices, ry extension into “tunnels” and the develop- promising. Heil Trailer continues to remain but the companyelectronics responded revenue byelectronics cutting costs revenuement of software systems that electronicsallow drivers to saleselectronics sales focused on internal efficiencies and has closed and expanding its market by developing special- activate the equipment by credit card. Despite a facility in the U.K., outsourcing European ized new products$500 to enhance auto service$500 a strong fourth quarter, PDQ’s 2004 sales$40 $40 product manufacturing to Eastern European technicians’ productivity400 and safety. Special400 dipped with the adverse effects of hurricanes32 locations to improve margins and enhance its tools designed to300 facilitate removal of300 engines and soaring gasoline prices. Koolant Koolers24 service capabilities. Heil Trailer ended 2004 from certain Mer200cedes Benz autos, for200 exam- continues to do well selling its chillers 16into a with a large backlog of military and commercial ple, were well received by Daimler-Chrysler variety of markets. 100 100 8 contracts. customer service organizations. Dover Industries expects to realize further Somero had a strong 2004. ($It inhas millions) broad- ($ inChief millions) Automotive02 had03 04an excellent year02 for03 04 growth($ in millions) in 2005, as steel($ in pricesmillions) moderate,02 and03 04 (Financial information presented(Financial on the information new presented on the new (Financial information presented(Financial on the information new presented on the new ened its line of laser-guided concrete2005 segment screeding basis) its2005 auto segment frame-straightening basis) equipment, due in its2005 companies segment basis) leverage2005 their segment strong basis) market- equipment with the introduction of a new stan- part to an increased emphasis on precision leading positions in both the Mobile Equipment dard unit with modular design, and a smaller measuring equipment as a core competency. and Service Equipment groups. Going forward, it will continue to fine tune its

industries revenueindustries revenue industries salesindustries sales

$800 $800 $100 $100

640 640 80 Dover Industries 480 480 60 Timothy J. Sandker President and 320 320 40 Chief Executive Officer 160 160 20 Revenue Operating Income ($ in millions) ($ in millions) 02 03 04 02 03 04 ($ in millions) ($ in millions) 02 03 04 (Financial information presented(Financial on the information new presented on the new (Financial information presented(Financial on the information new presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis)

Mobile Equipment

Michael Jobe Gordon Shaw Robert Foster Jack Cooney President President President President Heil Environmental Marathon Equipment Heil Trailer International Somero Enterprises, Industries, Ltd. Company LLC Service Equipment

Eric Howlett Randy Gard Charles Lieb Greg Wilkerson President President President President Rotary Lift Chief Automotive PDQ Manufacturing, Inc. Koolant Koolers, Inc. Systems, Inc. 12 Dover Resources

In 2004, Dover Resources generated record sales and earnings, exceeding $1.0 billion in sales and $200 million in earnings

for the first time. Under the new segment structure, Dover Resources lost one company, Hydro Systems, which was trans-

ferred to Dover Electronics, leaving 11 companies organized into three groups, Oil and Gas Equipment, Fluid Solutions, and

Material Handling. These companies occupy niche positions in these market areas and are leveraging their strong brands on

a global basis.

The Dover Resources businesses continue to exploit emerging markets and seek out complementary add-on acquisitions that

further expand their markets and product offerings. Expanding their global manufacturing and sourcing operations is anoth-

er shared goal among the companies in this segment, many of which are sourcing a growing volume of products and com-

ponents from China, India, Brazil and the Czech Republic. A continued focus on lean initiatives is also helping to keep them

competitive.

diversified sales resources revenue resources revenue resources sales

$100 $1,200 $1,200 $200

80 960 960 160 Dover Resources 60 720 720 120 David J. Ropp President and 40 480 480 80 Chief Executive Officer 20 240 240 40 Revenue Operating Income 02 03 04 ($ in millions) ($02 in millions)03 04 02 03 04 ($ in millions) ($02 in millions)03 04 (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis)

Fluid Solutions

FLUID TRANSFER GROUP

Craig P. McNeill John F. Anderson Carmine Bosco John Allen Soma Somasundaram President President President President President electronics sales OPW Fueling ComponentssystemsOPW Fluid revenue Transfer Blackmersystems revenueWilden Pump and RPA Processsystems sales Group Engineering LLC Technologies Material Handling $40 $650 $650 $100

32 520 520 80

24 390 390 60 Jon Kreitz Michael Clute Jon H. Simpson Steven C. Oden 40 16 President 260President President 260 President Warn Industries, Inc. Texas Hydraulics, Inc. De-Sta-Co Tulsa Winch, Inc. 8 130 130 20

02 03Gas04 & Oil ($ in millions) ($02 in millions)03 04 02 03 04 ($ in millions) ($02 in millions)03 04 Equipment (Financial informationEnergy presented on the new (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis) Products Group

Vernon E. Pontes David A. Jackson President President Energy Products Group C. Lee Cook

industries sales technologies revenue technologies revenue technologies sales

® The Oil & Gas Equipment group includes the the loading arms, swivels and couplings, valves, The Warn brand, which has a solid follow- 13 Energy Products Group, which makes products and railcar and truck accessories made by ing among “off-road” and “all-terrain vehicle” for petroleum exploration and production, and OPW Fluid Transfer Group must meet equally owners, has continued to lead the market with C. Lee Cook, a provider of piston and seal rigorous standards. an innovative product portfolio. rings, compressor packing and compressor Blackmer’s pumps and compressors, tradi- Texas Hydraulics generated the segment’s services for natural gas transmission. These tionally used in the transportation of petroleum largest percentage growth in sales and earn- businesses, which operate primarily in North and chemical products, are increasingly being ings in 2004 due primarily to new products, America, benefited in 2004 from record oil purchased to move food products and pharma- expanded marketing efforts, and new applica- prices and high but stable natural gas prices ceuticals, a very positive new market develop- tions designed to solve customers’ specific that led to high drilling activity. With the excep- ment. The same is true for Wilden’s air-operat- problems. Despite a slowing auto industry, tion of major oil company capital spending, ed double diaphragm pumps. Almatec GmbH, a De-Sta-Co benefited from its strong global industry indicators at the close of 2004 were leading European maker of air-operated double position and overall market growth for its work- primarily favorable. diaphragm pumps, became a Wilden subsidiary holding devices, achieving positive results. Most of these Dover Resources’ business- in December 2004. New products, global Tulsa Winch, which makes winches for con- es operate in the less capital-intensive niches sourcing initiatives, and add-on acquisitions will struction equipment, mobile cranes, petroleum of the energy industry and have a strong focus remain key drivers of growth and profitability service rigs, military vehicle, and marine appli- on consumables. The Energy Products Group, for this group in 2005. The RPA Process cations, had a strong year, driven by its new for example, makes valves and controls, sucker Technologies business has expanded its product introductions, synergies across its wide rods, transducers and plunger lifts. U.S. global sales, service, and sourcing network, product offerings, and strong positions with Synthetic, a 2004 acquisition, makes “consum- allowing it to participate in major global major OEM customers. able” diamond drill bit inserts and benefits sub- markets, particularly petroleum, refinery, and Assuming that energy prices remain at or stantially from increased drilling activities. minerals processing. around current levels through the remainder of Two of the five companies in the Fluid All four companies in the Material Handling the year and that the general economy remains Solutions group operate in businesses that are group have been able firm, Dover Resources is well-positioned to heavily impacted by evolving environmental reg- to leverage industry deliver another favorable perform- ulations. For example, OPW Fueling leading brands ance in 2005. Components’ equipment for retail and commercial service stations must be continually re- engineered to comply with increasingly stringent air and groundwater environmental regulations. Similarly,

in their served markets to achieve sales and earnings growth. Warn®, which is a strong consumer brand, makes vehicle self-recovery winches, industrial material handling winches, and locking wheel hubs for off-road vehicles.

OPW is the world’s leading manufacturer of fueling devices, including its market-leading vapor recovery gasoline nozzles, which are assembled and sold globally. 14 Dover Systems

Despite a challenging year in 2004, Dover Systems anticipates that its five companies’ efforts to leverage their excellent

brands will begin paying off with improved results in 2005. In both the Food Equipment and Packaging Equipment groups,

management teams are focused on providing customers with the “Best Value Alternative” through product innovation and

providing system solutions that solve customer needs.

In the Food Equipment group, Hill PHOENIX is a leader in commercial refrigeration systems, refrigerated display cases, walk-

in coolers, and electrical distribution systems for the retail food industry and certain specialty retail markets. After record

sales and earnings in 2003, Hill PHOENIX had another record sales year in 2004, although earnings remained essentially flat,

as expected.

Dover Systems Ralph S. Coppola President and Chief Executive Officer

Food Equipment

Ray Hoglund William Strenglis President President Hill PHOENIX, Inc. DI Foodservice

Packaging Equipment

David Pierce Richard S. Steigerwald Roland Parker President President President Tipper Tie, Inc. Belvac Production SWF Companies LLC Machinery, Inc. Hill PHOENIX continues to develop new lead- and direct accounts. DI Foodservice will also capabilities with faster, more flexible equipment, 15 ing edge products through continued invest- explore opportunities to work with Hill continued international expansion, a growing ment in research and development, and focus PHOENIX in each other’s traditional markets. parts business, and excellent service. Belvac on new customer accounts, and it expects that Tipper Tie, which is part of the Packaging opened a parts distribution center in Eastern those efforts will drive increased sales and Equipment group, has a strong presence in Europe during 2004 which should also improve earnings in 2005. North America and Europe. The company man- results in 2005. DI Foodservice, which is a combination of ufactures a variety of machinery, clips and SWF, another Packaging Equipment compa- the Groen, Randell and Avtec brand product loops as a means of flexible packaging closure. ny, had a disappointing 2004 as anticipated lines, designs, manufactures and sells commer- These machines and clips are sold worldwide, sales increases were not realized, resulting in a cial cooking, refrigeration, custom fabrication primarily for use with meat, poultry and other loss for the year. The company, which makes and ventilation equipment for the municipal, food products. Tipper Tie had an excellent year automated packaging machines, has developed institutional and commercial food service mar- in 2004 and is committed to continue driving new modular platforms to reduce costs, kets. In 2004, DI Foodservice was faced with profitable growth in 2005 by increasing sales of increase cycle times, and improve quality. With continued softness in its institutional markets consumables (clips and loops), maintaining its these new platforms, SWF expects better per- and had to deal with integration and operational core machine sales base and developing new formance in 2005 by providing total solutions, diversified revenue diversified sales resources revenue problems including excessive warranty costs in products. including innovative use of robotics, to meet connection with the introduction of a new prod- Belvac, like Tipper Tie, had a solid 2004 and customers’ packaging needs. $100 $1,200 uct. Going forward in 2005, new management ended the year with promising bookings for Overall, Dover Systems expects 2005 will is in place and has implemented a more stream-80 2005. Although the bottling industry’s current reflect higher sales and earnings with 960increased lined organization to provide improved service60 needs for can necking equipment is mature, margins and better overall operating perform-720

and responsiveness to its distribution network40 market leading Belvac continues to expand its ance. 480

20 240

($ in millions) 02 03 04 ($ in millions) 02 03 04 (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis)

resources revenue resources sales

$1,200 $200

960 160 electronics revenue electronics sales systems revenue 720 120

480 80 $40 $650 240 40 32 520

($ in millions) 24 02 03 04 ($ in millions) 390 02 03 04 (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis) 16 260

8 130 Revenue ($ in millions) 02 03 04 ($ in millions) 02 03 04 (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis)

systems revenue systems sales

$650 $100

520 80

390 60 industries revenue industries260 sales technologies40 revenue

Hill PHOENIX is one of the leading 130 20 manufacturers of refrigerated food cases $100 Operating Income $1,500 and systems, including($ in millions) this state-of-the-art, 02 03 04 ($ in millions) 02 03 04 (Financial information presented on the new80 (Financial information presented on the new 1,200 two level Coolgenix2005 segment™ case. basis) 2005 segment basis) 60 900

40 600 02 03 04 ($ in millions) ($ 02in millions)03 04 02 03 04 ($ in millions) ($ 02in millions)03 04 (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis)

16 Dover Technologies International

Dover Technologies’ two business groups are oriented around two very dynamic industries, Product Identification and electronics sales systems revenue systems revenue systems sales Printing and the Circuit Assembly and Test (CAT) portion of electronic product manufacturing.

$40 In December 2004, Dover expanded its presence$650 in the fast-evolving Product$650 Identification market, which is already$100 served

32 520 520 80 by France-based Imaje and U.S.-based Mark Andy, with the acquisition of Florida-based Datamax Corporation. 24 390 390 60 Imaje, coming off its best year ever in sales and earnings, sells its marking and coding systems in 90 countries through 30 16 260 260 40

8 subsidiaries and has manufacturing operations130 in France, the U.S. and China.130 Imaje’s Continuous Ink Jet (CIJ) products20 prin-

cipally mark primary product packaging. It also makes Thermal Transfer on Line (TTOL) units to print on flexible packages 02 03 04 ($ in millions) ($ 02in millions)03 04 02 03 04 ($ in millions) ($ 02in millions)03 04 (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new and its Drop-on-Demand2005 segment basis) (DOD) ink jet systems2005 segment are basis)used to mark secondary packaging2005 segmentfor logistics basis) and warehouse2005 needs segment basis)

such as pallets and containers.

industries sales technologies revenue technologies revenue technologies sales

$100 $1,500 $1,500 $160

80 1,200 1,200 128 Dover Technologies International 60 900 900 96 John E. Pomeroy 40 President and 600 600 64 Chief Executive Officer 20 300 300 32 Revenue Operating Income 02 03 04 ($ in millions) ($ 02in millions)03 04 02 03 04 ($ in millions) ($ 02in millions)03 04 (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new (Financial information presented on the new 2005 segment basis) 2005 segment basis) 2005 segment basis) 2005 segment basis)

Circuit Assembly & Test Equipment

Ian S. deSouza John F. Hartner Jeroen Schmits John Hover President Managing Director President President Universal Instruments DEK Printing Vitronics Soltec Hover-Davis, Inc. Corporation Machines Limited International BV

David Van Loan Claus Lichtenberg Michael J. President President Gouldsmith Everett Charles Alphasem AG President Technologies OK International, Inc. Production Identification & Printing Equipment

Omar Kerbage Paul N. Brauss William Bouverie President President President Image S.A. Mark Andy, Inc. Datamax Corp. Datamax is a worldwide supplier of barcode ucts. To this end, Universal Instruments, which ment made by Universal Instruments as well as 17 printing machines largely serving logistics and makes automated assembly equipment primari- other OEM’s. Everett Charles had an outstand- warehouse management operations, as well as ly for printed circuit boards, has brought to mar- ing year as the leading earnings company at a broad range of industries that require auto- ket several new products and modules, serving Dover. Its range of equipment includes test mated identification and data collection. both the mid-range and the high speed assem- devices for bare circuit boards, assembled cir- Datamax’s printers are capable of RFID integra- bly equipment segments with outstanding price cuit boards and semiconductors. Everett tion and this evolving technology is increasingly and performance characteristics, resulting in Charles has been particularly successful in demanded by the market place. Mark Andy’s growing market acceptance. Although commer- developing new equipment for testing circuit narrow web color presses are used for product cialization costs and uneven market conditions boards both faster and more cost effectively labeling and also for inserting RFID microchips impacted Universal’s profitability in 2004, the than its competitors. One third of its business into product labels to facilitate tracking. company expects to continue to grow sales is in consumables, probes, sockets and fix- Collectively, these companies are now well- and improve earnings in 2005. tures, which secures a steady recurring rev- positioned to help Dover customers meet their DEK Printing Machines, with mass-imaging enue stream. product printing and identification requirements equipment (screen printing), and Vitronics Alphasem, with its core competence in at every stage of manufacture and distribution. Soltec, with machine soldering equipment, back-end semiconductor packaging, has The need for continual product innovation is cover the pre- and post-assembly process expanded beyond the traditional die-bonding a reality for all Dover companies, and no where steps in automated circuit board assembly man- process and is automating manufacturing is this more true than at the CAT companies, ufacturing. Because of innovative new prod- processes for power devices, micro-electro- where the rapid pace of technological advance- ucts, technology leadership and smart cus- mechanical sytems (MEMS), light emitting ment demands an extraordinary level of agility tomization, both companies were able to solidi- diodes (LED’s), camera modules and other and responsiveness. All of Dover’s CAT compa- fy their market share leadership positions. DEK newly evolving components. Both companies nies, whether involved in board level or compo- has complemented its equipment sales with a expect their recent marketing and product nent level packaging and test, have introduced growing and recurring tooling and consumables development efforts to help build on the suc- a host of new products to the mar- business. Vitronics Soltec has emerged as cesses achieved in 2004. ket in the past few years and a leading company in lead-free soldering Finally, OK International, with manual indus- continue to invest in develop- technology, which is mandated in trial tools for the electronic assembly working new leading edge prod- Europe by July 2006. It has intro- bench, has also introduced a number of new duced new and improved products products. Their new hand solder devices with in all three segments of soldering interchangeable and replaceable solder tips and equipment: wave, reflow and excellent thermal performance are of particular selective soldering. Hover-Davis significance for quality and cost conscious elec- provides component feeders for tronic manufacturers. a wide range of assembly equip- Aside from the high level of innovation at the CAT companies and the significant number of new products they brought to the market in 2004, it should be noted that all CAT companies are now manufacturing a growing portion of their products in China. With major electronic manufacturing industries now located in Asia, the move to manufacture there was essential in order to maintain the global competitiveness of the CAT companies.

Imaje is a leading provider of product marking solutions, including this CIJ unit which is coding and dating products on a customer’s high speed manufacturing line. 18 11-Year Consolidated Summary of Selected Financial Data

(in thousands except per share figures, percentages, and number of employees) 2004 2003 2002 2001

Dover Continuing Operations Net sales $5,488,112 4,413,296 4,053,593 4,223,245 Cost of sales 3,593,748 2,892,874 2,722,674 2,869,782 Selling and administrative expenses 1,282,162 1,076,664 996,209 1,039,581 Interest expense 68,114 68,265 69,899 90,874 Other income (expense), net 8,058 (3,601) (1,442) 29,926 Earnings before taxes 552,146 371,892 263,369 252,934 Income taxes 143,006 86,676 55,523 74,698 Net continuing earnings $ 409,140 285,216 207,846 178,236 % of sales 7.5% 6.5% 5.1% 4.2% Return on average equity1 14.2% 11.5% 9.0% 8.2% EPS per diluted common share: Net earnings $ 2.00 1.40 1.02 0.87 Goodwill amortization (net of tax) $ — — — 0.20 Net continuing earnings before goodwill $ 2.00 1.40 1.02 1.07 Depreciation and amortization $ 160,845 151,309 156,946 207,845 Net property, plant and equipment $ 756,680 717,875 676,196 709,756 Total assets $5,781,358 4,995,373 4,278,718 4,362,041 Total debt $1,092,327 1,067,584 1,054,060 1,075,170 Capital expenditures $ 107,434 96,400 96,417 158,773 Working capital $ 793,971 938,839 936,511 757,987 TOTAL DOVER Net earnings (losses) $ 2.02 1.44 (0.60) 1.22 Dividends per common share $ 0.62 0.57 0.54 0.52 Book value per common share $ 15.33 13.50 11.83 12.44 Acquisitions (economic cost basis)2 $ 514,303 372,385 100,138 281,819 Common stockholders’ equity $3,118,590 2,739,380 2,394,767 2,519,539 Common shares outstanding 203,497 202,913 202,402 202,579 Weighted average number of diluted shares 204,786 203,614 203,346 204,013 Closing common stock price per share $ 41.94 39.75 29.16 37.07 Number of employees 28,102 25,729 24,934 26,634

1 “Return on average equity” — Net continuing earnings divided by the average of the current year and prior year equity amounts less discontinued operations. 2 “Acquisitions (economic cost basis)” — Represents the acquisition purchase price adjusted for long-term debt assumed and cash acquired on the date of acquisition. Dover Corporation and Subsidiaries 19

2000 1999 1998 1997 1996 1995 1994

4,889,035 3,955,622 3,519,046 3,266,162 2,887,222 2,793,977 2,183,916 3,081,945 2,501,926 2,243,918 2,065,219 1,858,404 1,847,607 1,453,323 1,021,329 877,018 798,138 731,879 623,436 577,535 464,279 96,924 52,868 60,202 45,808 41,268 39,559 36,064 27,701 31,094 16,129 16,883 89,684 34,541 23,806 716,538 554,904 432,917 440,139 453,798 363,817 254,056 219,055 187,400 142,180 148,915 148,291 119,420 84,961 497,483 367,504 290,737 291,224 305,507 244,397 169,095 10.2% 9.3% 8.3% 8.9% 10.6% 8.7% 7.7% 27.0% 24.2% 22.4% 25.1% 28.7% 26.5% 14.6%

2.43 1.74 1.30 1.28 1.33 1.07 0.74 0.18 0.14 0.10 0.09 0.06 0.05 0.06 2.61 1.88 1.40 1.37 1.39 1.12 0.80 178,485 158,800 145,288 137,802 97,269 86,983 76,393 659,958 556,559 481,117 440,039 414,315 363,862 273,518 4,371,068 3,647,954 2,978,876 2,499,162 2,349,115 2,221,220 1,645,956 1,471,969 902,736 1,040,369 691,794 743,764 675,580 517,647 177,823 112,140 101,009 101,188 103,345 88,295 70,480 196,761 155,393 219,070 206,077 160,316 191,353 260,070

2.54 4.41 1.69 1.79 1.69 1.22 0.88 0.48 0.44 0.40 0.36 0.32 0.28 0.25 12.02 10.06 8.67 7.65 6.62 5.40 4.39 506,250 599,171 556,019 261,460 281,711 323,291 185,324 2,441,575 2,038,756 1,910,884 1,703,584 1,489,703 1,227,706 1,011,230 203,184 202,629 220,407 222,596 225,060 227,340 226,920 204,677 210,679 224,386 226,815 230,518 227,815 228,740 40.56 45.38 36.63 36.13 25.25 18.44 12.91 29,489 26,584 23,314 21,814 19,213 18,337 15,512 freefreefree cashcash cash flowflow flow

$400$400 10%10% $400$400 freefree cash cash flow flow 10%10% 20 Consolidated Summary of Selected Financial Data 320320 freefree cash cash flow flow 8 8 $400320$400320 free cash flow 10%810%8 $400240$400240 10%610%6 240320320240 68 86 $400 10% 320160320160 84 84 160240240160 46 64 320 8 2408024080 62 62 1608016080 24 42 240 6 160160 4 4 ($($ in inmillions) millions) 8080949495959696979798989999000001010202030304042 2 94 95 96 97 98 99 00 01 02 03 04 ($(A) ($(A)in Free inmillions) Free millions) cash cash flow flow is isdefined defined as as 160 94 95 96 97 98 99 00 01 02 03 04 4 (A)operating(A)operating Free Free cash cashcash cash flow afterflow after is fundingisdefined fundingdefined capitalas capitalas FreeFree Cash Cash80 Flow80 Flow Free Free Cash Cash Flow Flow as as a %a % of of Sales Sales2 2 FreeFree Cash Cash Flow Flow Free Free Cash Cash Flow Flow as as a %a %of ofSales Sales operatingexpendituresoperatingexpenditures cash cash and afterand afterdividends. dividends.funding funding capital capital expenditures($($ expendituresin inmillions) millions) and and dividends. dividends. 80 949495959696979798989999000001010202030304042 (A)(A) Free Free cash cash flow flow is isdefined defined as as ($($ in inmillions) millions) 94949595969697979898999900000101020203030404 NetNet Debt Debt Freeoperatingoperating Cash cash cash after afterFlow funding funding (A) capital capital FreeFree Cash Cashcashcash Flow Flow dividend Free dividend Free Cash Cash Flow Flow toas asto a a%shareholders % shareholdersof of Sales Sales (A)(A) Free Free cash cash flow flow is isdefined defined as as NetNet Debt Debt expendituresexpenditures and and dividends. dividends. cashcash dividend dividend to to shareholders shareholders operating($operating in millions) cash cash after after funding funding capital capital FreeFree Cash Cash Flow Flow94 95 Free 96Free 97Cash Cash98 Flow99 Flow00 as as 01a %a 02% of of 03Sales Sales04 expenditures(A)expenditures Free cash and flow and dividends. is dividends. defined as $1$1,50,5000 50%50% operating cash after funding capital Free Cashcash$.60cash $.60Flow dividend Freedividend Cash Flow toas to a %shareholders shareholdersof Sales $50 $50 $1,5$10,5000 NetNet Debt Debt 50%50% $.60$.60 $50 $50 NetNet Debt Debt expenditures and dividends. cashcash dividend dividend to to shareholders shareholders 1,2001,200 4040 .48.48 4040 .48.48 4040 $11$1,,520010,5,200000 Net Debt 4050%50%40 cash$.60$.60 dividend to shareholders $50 $50 900900 3030 .36.36 $50 30$5030 $1$1,50,5000 50%50% $.60.36$.60.36 3030 1,9002001,200900 30404030 .48.48 4040 $.60 $50 $1,560006000 50%2020 .24.24 40204020 1,2001,200 4040 .24.48.48.24 2020 600900900600 20303020 .36.36 3030 .48 40 1,200300300 401010 .12.12 30103010 900900 3030 .12.36.36.12 1010 300600600300 10202010 .24.24 2020 900 30 .36 30 600600 2020 .24.24 2020 ($($ in inmillions) millions) 300300949495959696979798989999000001010202030304041010 .12.12949495959696979798989999000001010202030304041010 ($ ($in inmillions) millions) 94949595969697979898999900000101020203030404 94949595969697979898999900000101020203030404 600 20 .24 20 NetNet300 300Debt Debt Net Net Debt Debt as as a %a % of of Total Total Capital Capital1010 .12.12 DividendDividend Dover Dover Stock Stock Price Price1010 NetNet Debt Debt Net Net Debt Debt as as a %a %of ofTotal Total Capital Capital DividendDividend Dover Dover Stock Stock Price Price ($Net($ in inmillions) millions) Debt 300 9494959596969797989899990000010102020303040410 Cash Dividend to Shareholders.12 9494959596969797989899990000010102020303040410 ($($ in inmillions) millions) NetNet Debt Debt94 94 long-termlong-term 95 long-term Net95 Net96 96Debt97 Debt9798 as98 as 99a 99a%00 % investmentofinvestment00 ofinvestment 01Total 01Total0202 Capital03 Capital030404 949495revenue95revenueDividend96revenueDividend96979798 98 99 Dover99 Dover00 vsvs00 01vs Stock01 Stock02earningsearnings 02earnings03 Price 03Price0404 ($ in millions) NetNet Debt Debt94 95 Net 96Net Debt97 Debt98 as as 99a %a00 % of of 01Total Total02 Capital03 Capital04 94 95Dividend96Dividend97 98 99 Dover Dover00 01 Stock Stock02 03Price Price04

Net$750$750 Debt Net Debt as a % of Total Capital $6,000$6,000 Dividend Dover Stock Price $500$500 $750$750 long-termlong-term investment investment $6,000$6,000 revenuerevenue vs vs earnings earnings$500$500 600600 long-termlong-term investment investment 4,8004,800 revenuerevenue vs vs earnings earnings400400 4,800 $750600$750600 long-term investment $6,0004,800$6,000 revenue vs earnings$500400$500400 450450 3,6003,600 300300 $750$750 $6,000$6,0003,600 $500$500 450600600450 3,6004,8004,800 300400400300 $750300300 $6,0002,4002,400 $500200200 600600 4,8004,8002,400 400400 300450450300 2,4003,6003,600 200300300200 600150150 4,8001,2001,200 400100100 450450 3,6003,6001,200 300300 150300300150 1,2002,4002,400 100200200100 450 3,600 300 300300 2,4002,400 200200 ($($ in inmillions) millions) 15015094949595969697979898999900000101020203030404 ($($ in inmillions) millions) 1,2001,20094949595969697979898999900000101020203030404100100 94949595969697979898999900000101020203030404 ($ ($in inmillions) millions) 300 94949595969697979898999900000101020203030404 ($ ($in inmillions) millions) 2,400 200 Long-Term Investment 150150 AcquisitionsAcquisitions Capital Capital Expenditures Expenditures Revenue vs. Net Earnings 1,2001,200 RevenueRevenue Net Net Earnings Earnings100100 AcquisitionsAcquisitions Capital Capital Expenditures Expenditures RevenueRevenue Net Net Earnings Earnings ($($ in inmillions) millions) 150 94949595969697979898999900000101020203030404 ($($ in inmillions) millions) 1,200 94949595969697979898999900000101020203030404100 ($($ in inmillions) millions) 94Acquisitions94Acquisitions959596969797 98 98 Capital99 Capital990000 01Expenditures 01Expenditures020203030404 ($($ in inmillions) millions) 94949595969697Revenue97Revenue98989999 00 00 Net01 Net0102 Earnings 02Earnings03030404 ($ in millions) 94AcquisitionsAcquisitions95 96 97 98 Capital 99 Capital00 01Expenditures Expenditures02 03 04 ($ in millions) 94 95revenue96revenue97RevenueRevenue98 99 00 by Net 01by Net 02 subsidiaryEarnings subsidiaryEarnings03 04 operatingoperating income income by by subsidiaries subsidiaries revenuerevenue by by subsidiary subsidiary Acquisitions Capital Expenditures Revenue Net Earnings $650$650 $6,000$6,000 $650$650operatingoperating income income by by subsidiaries subsidiaries $6,000$6,000 revenuerevenue by by subsidiary subsidiary 520520operatingoperating income income by by subsidiaries subsidiaries 4,8004,800 revenuerevenue by by subsidiary subsidiary $650520$650520operating income by subsidiaries $6,0004,800$6,0004,800 revenue by subsidiary $650390$650390 $6,0003,600$6,0003,600 390520520390 3,6004,8004,8003,600 $650 $6,000 520260520260 4,8002,4004,8002,400 260390390260 2,4003,6003,6002,400 520 4,800 390130130 3,6001,2003,6001,200 130390130 1,2001,200 Operating Income by Subsidiaries260260 Revenue by Subsidiary 2,4002,400 390 3,600 260260 2,4002,400 ($($ in inmillions) millions) 130130 20022002 20032003 20042004 ($($ in inmillions) millions) 1,2001,200 20022002 20032003 20042004 ($ in millions) ($ in millions) 20022002 20032003 20042004 ($ in millions) 260 20022002 20032003 20042004 ($ in millions) 2,400 DiversifiedDiversified Electronics Electronics Industries Industries 130Resources 130Resources Systems Systems Technologies Technologies DiversifiedDiversified Electronics Electronics Industries Industries 1,200 Resources 1,200 Resources Systems Systems Technologies Technologies DiversifiedDiversified Electronics Electronics Industries Industries Resources Resources Systems Systems Technologies Technologies DiversifiedDiversified Electronics Electronics Industries Industries Resources Resources Systems Systems Technologies Technologies ($($ in inmillions) millions) 130 20022002 20032003 20042004 ($($ in inmillions) millions) 1,200 20022002 20032003 20042004 ($($ in inmillions)Diversified millions)Diversified Electronics Electronics Industries Industries Resources Resources20022002 Systems Systems20032003 Technologies Technologies20042004 ($($ Diversifiedin Diversified inmillions) millions) Electronics Electronics Industries Industries Resources Resources20022002 Systems Systems20032003 Technologies Technologies20042004 1%1% ($ in millions)DiversifiedDiversified Electronics Electronics Industries Industries Resources Resources2002 Systems Systems2003 Technologies Technologies2004 ($ DiversifiedinDiversified millions) Electronics Electronics Industries Industries Resources Resources2002 Systems Systems2003 1% 1% Technologies 1% Technologies2004 1%1% Diversified Electronics Industries Resources Systems Technologies Diversified Electronics Industries Resources Systems Technologies 9%9% 1%1% 9%9% 1%1% 1414%% 20%20%1%1% 1414%% 20%20%1%1% 9%9% 56%56% 1% 56%56% 1% 142114%21%%%9%9% 20%20% 78%78% 2121%% 78%78% 1414%%9% 56%56% 20%20% 2004 Sales by Region 142121%%% 56%56% 2004 Long-Lived Assets by Region 20% 78%78% UnitedUnited States States Europe Europe Pacific Pacific Rim21 Rim21% % Rest Rest of of World World UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest78% of78% of World World UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest of56% ofWorld World UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest of ofWorld World 21% 78% UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest of of World World UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest of of World World UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest of of World World UnitedUnited States States Europe Europe Pacific Pacific Rim Rim Rest Rest of of World World

United States Europe Pacific Rim Rest of World United States Europe Pacific Rim Rest of World UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ¥ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the scal year ended December 31, 2004 OR n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File No. 1-4018 Dover Corporation (Exact name of Registrant as specied in its charter)

Delaware 53-0257888 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identication No.) 280 Park Avenue 10017 New York, NY (Zip Code) (Address of principal executive oces)

Registrant's telephone number, including area code: (212) 922-1640

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered Common Stock, par value $1 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Title of Class None

Indicate by check mark whether the Registrant (1) has led all reports required to be led by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to le such reports) and (2) has been subject to such ling requirements for the past ninety days. Yes ¥ No n

Indicate by check mark if disclosure of delinquent lers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in denitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. n

Indicate by check mark whether the registrant is an accelerated ler (as dened in Rule 12b-2 of the Securities and Exchange Act of 1934). Yes ¥ No n The aggregate market value of the voting and non-voting common stock held by non-aliates of the Registrant as of the close of business June 30, 2004 was $8,559,923,012.7. Registrant's closing price as reported on the New York Stock Exchange-Composite Transactions for June 30, 2004 was $42.10 per share. The number of outstanding shares of the Registrant's common stock as of February 28, 2005 was 203,697,833.

Documents Incorporated by Reference Part III Ì Certain Portions of the Proxy Statement for Annual Meeting of Stockholders to be Held on April 19, 2005 (the ""2005 Proxy Statement''). Special Notes Regarding Forward-Looking Statements This Annual Report on Form 10-K, and the documents that are incorporated by reference, particularly sections of the Annual Report to Stockholders under the headings ""Letter to Shareholders,'' and ""Manage- ment's Discussion and Analysis,'' contain forward-looking statements within the meaning of the Securities Exchange Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, the U.S. and global economies, earnings, cash ow, operating improvements, and industries in which the Company operates, and may be indicated by words or phrases such as ""anticipates,'' ""supports,'' ""plans,'' ""projects,'' ""expects,'' ""believes'', ""should,'' ""would,'' ""could,'' ""hope,'' ""forecast,'' ""management is of the opinion,'' use of the future tense and similar words or phrases. Such statements may also be made by management orally. Forward- looking statements are subject to inherent uncertainties and risks, including among others: continued events in the Middle East and possible future terrorist threats and their eect on the worldwide economy; economic conditions; increasing price and product/service competition by foreign and domestic competitors including new entrants; technological developments and change which can impact the Company's Electronics and Technologies segments signicantly; the ability to continue to introduce competitive new products and services on a timely, cost-eective basis; changes in the cost or availability of raw materials or energy, particularly steel and other raw materials; changes in customer demand; the extent to which the Company is successful in expanding into new geographic markets, particularly outside of North America; the extent to which the Company is successful in integrating acquired businesses; the relative mix of products and services which impacts margins and operating eciencies; the achievement of lower costs and expenses; domestic and foreign governmental and public policy changes including environmental regulations and tax policies (including domestic and foreign export subsidy programs, R&E credits and other similar programs, some of which were changed in 2004); unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; the success of the Company's acquisition program; and the cyclical nature of some of the Company's businesses. In addition, such statements could be aected by general industry and market conditions and growth rates, and general domestic and international economic conditions including interest rate and currency exchange rate uctuations. In light of these risks and uncertainties, actual events and results may vary signicantly from those included in or contemplated or implied by such statements. Readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

1 PART I

Item 1. Business Overview Dover Corporation (""Dover'' or the ""Company''), originally incorporated in 1947 in the State of Delaware, became a publicly traded company in 1955. It is a diversied industrial manufacturing corporation encompassing 49 operating companies that primarily manufacture a broad range of specialized industrial products and sophisticated manufacturing equipment, and seek to expand their range of related services. Additional information is contained in Items 7 and 8. The Company's businesses have been divided into four business segments. Diversied builds packaging and printing machinery, heat transfer equipment, food refrigeration and display cases, specialized bearings, construction and agricultural cabs, as well as sophisticated products for use in the defense, aerospace and automotive industries. Industries makes products for use in the waste handling, bulk transport, automotive service, commercial food service and packaging, welding, cash dispenser and construction industries. Resources manufactures products primarily for the automotive, uid handling, petroleum, original equipment manufacturers (OEM), engineered components and chemical equipment industries. Technologies builds sophisticated automated assembly and testing equipment and specialized electronic components for the electronics industry, and industrial printers for coding and marking. Eective January 1, 2005, the Company organized its 49 operating companies into 13 groups within six segments, adding the Electronics and Systems subsidiaries. Beginning with the rst quarter 2005 earnings announcement in April 2005, the Company will report its results in these six business segments and discuss its operating companies in 13 groups. Management believes this new operating structure will enhance the Company's market focus, acquisition capacity and executive leadership.

Business Strategy The Company operates with certain fundamental objectives. First, it seeks to acquire and own businesses with proprietary, engineered industrial products which make them leaders in the niche markets which they serve. Second, these businesses should be customer focused, innovative and well managed to achieve above average prot margins by supplying customers with value-added products and related services. Third, the Company expects that these types of businesses will generate strong cash ow which can not only sustain such operations, but also provide excess cash ow which the Company can then reinvest in similar business opportunities. The Company expects to manage its cash ow so that the mix of its external debt levels and capital structure are optimized to support continued ready access to the capital markets.

Management Philosophy The Company practices a highly decentralized management style. The presidents of the operating companies are given a great deal of autonomy and have a high level of independent responsibility for their businesses and their performance. This is in keeping with the Company's operating philosophy that independent operations are better able to serve customers by focusing closely on their products and reacting quickly to customer needs. The Company's executive management role is to provide management oversight, allocate and manage capital, assist in major acquisitions, evaluate, motivate and, as necessary, replace operating company management and provide selected other services.

Acquisitions and Divestitures The Company has a long-standing acquisition program. The Company seeks to acquire and develop ""platform'' businesses, which are marked by growth, innovation and higher than average prot margins. Each of its businesses should be a leader in its market as measured by market share, customer service, innovation, protability and return on assets. The Company traditionally focused on acquiring new businesses that could

2 operate independently from other Dover companies (""stand-alones''). Since 1993, an increased emphasis has been placed on acquiring businesses that can be added on to existing operations (""add-ons''). The target companies are generally manufacturers of high value-added, engineered products sold to a broad customer base of industrial or commercial users. One of the most critical factors in the decision to acquire a business is the Company's judgment of the skill, energy, ethics and compatibility of the top executives at the acquisition target. Dover generally expects that acquired companies will continue to be operated by the management team in place at acquisition, with a high degree of autonomy in keeping with the Company's decentralized structure. From January 1, 2000 through December 31, 2004, the Company made 58 acquisitions at a total acquisition cost of $1,809.0 million. These acquisitions have had a substantial impact on the Company's sales and earnings since 2000. During the three years 2001-2003, the overall number of Company acquisitions and dollars invested was lower than in previous years. This largely reected the general economic conditions and the lack of attractive acquisition candidates. In 2004, the Company acquired eight add-on businesses for an aggregate of $514.3 million, its highest acquisition spending level since 1999. For more details regarding acquisitions completed over the past two years, see Note 2 to the Consolidated Financial Statements in Item 8. The Company's future growth depends in large part on nding and acquiring successful businesses, as a substantial number of the Company's current businesses operate in relatively mature markets where sustained internal growth objectives are dicult to achieve. While the Company generally expects to buy and hold businesses, it does periodically reassess each business to verify that it continues to represent a good long-term investment. There may also be situations where a Company business represents a very attractive acquisition for another company based on specic market conditions. Based on these criteria, the Company has divested businesses. Over the past three years, the Company has been more proactive in evaluating its operating companies against internal growth and protability criteria. During that time, the Company has discontinued 13 and sold 15 operations for an aggregate consideration of $99.9 million. For more details, see the ""Discontinued Operations'' discussion below and Note 7 to the Consolidated Financial Statements in Item 8.

Business Segments For more nancial information about our business segments, see Note 14 to the Consolidated Financial Statements in Item 8.

Diversied Diversied's twelve stand-alone operating companies manufacture equipment and components for industrial, commercial and defense applications. A description of each stand-alone operating company is provided below. Hill Phoenix's U.S. manufacturing facilities provide refrigeration systems, display cases, walk-in coolers and freezers, electrical distribution products, and engineering services for sale to the supermarket industry, as well as to commercial/industrial refrigeration, big box retail and convenience store customers. Hill Phoenix sells equipment primarily in North America directly to the end user with a small percentage of sales through a dealer network and independent distributors. The Sargent companies design, manufacture and maintain uid control assemblies and structural components for the global aerospace and U.S. defense industries, supporting the full product life cycle, from the original design and build through the aftermarket. They specialize in complex uid control assemblies with typical end-use applications such as U.S. submarines, aircraft control systems and engine thrust reverser systems, land and amphibious utility vehicle actuation systems, helicopter rotary systems, engine pneumatic ducting and cooling systems, aircraft environmental control systems, and general airframe and engine structures. With manufacturing and repair facilities throughout North America, the businesses share common customers throughout the commercial aerospace and defense industries and sell direct to their end users: OEMs, airlines and government agencies. Performance Motorsports sells primarily internal engine components and other engine accessories into motorsport and powersport markets that include high performance racing, motorcycles, all-terrain vehicles,

3 snowmobiles and watercraft. Performance Motorsports products include forged and cast pistons, connecting rods, crankshafts and cylinder liners along with their complementary components, including piston rings, bearings, gaskets, and a variety of other internal valve train and engine components, as well as suspension, braking, clutching, and chassis components. Products are manufactured in the U.S. and Europe for sale through distributors. SWEP is a global leader in the design and manufacture of copper-brazed compact heat exchangers. It also manufactures heat exchangers and design software for district heating and district cooling substations. SWEP products are manufactured in Sweden, Switzerland, Malaysia and the U.S. and are sold via a direct sales force, through wholly-owned sales companies in the U.S., Europe and Asia, and by sales agents throughout the world for various applications in a wide variety of industries. Tranter PHE manufactures gasketed plate and frame heat exchangers, welded plate heat exchangers and all-welded heat exchangers for a wide range of applications in a variety of industries. PHE's products are manufactured in the U.S., Sweden, India and the U.K. Sales are split approximately 60/40 between Eurasia and the Americas. Products are sold through a network of manufacturers' representatives in North America, through wholly-owned sales companies in Europe and Asia, and by sales agents and manufacturers' representatives in the rest of the world. Belvac is a world leader in the beverage can-making industry in its global supplying of high-speed trimming, necking, bottom reforming, re-proling, and anging equipment. For that same industry, Belvac designs and manufactures shaping, bottom rim coating, and inspection equipment as enhancements to its core product line. In addition, Belvac designs and produces high-speed trimming and burnishing equipment for the plastic container industry, with an emphasis on containers for dry foods, condiments and specialty beverages. Belvac's products are designed and manufactured in the U.S., and sold through a direct sales force with oces in both the U.S. and Europe, supplemented by key agent-distributor relationships in South America and Asia. Crenlo fabricates operator cabs and rollover structures for sale to OEM manufacturers in the construction, agriculture, and commercial equipment markets, such as Caterpillar, John Deere & Company, and Case New Holland. In addition, Crenlo produces standard and custom high volume sheet metal enclosures for the electronics, telecommunications and electrical markets. Crenlo operates manufacturing facilities in the U.S., which is its primary market. Mark Andy manufactures printing/converting equipment and accessories primarily for the specialty packaging-printing segment at locations in the U.S. and Europe. Its major applications are product decoration, identication, and information applied to the exterior of a package. The company specializes in the fabrication of narrow web printing presses used for producing pressure sensitive labels, small folding cartons and exible packaging for the food, cosmetic, pharmaceutical and logistics markets. Products are sold primarily in the Americas and Europe through distributors. Hydratight Sweeney designs and manufactures products for critical bolting applications and joint integrity solutions, mainly in the oil and gas industry. Secondary markets include power generation, aviation and general industrial. Hydratight Sweeney's product lines reect dierent approaches to bolting and joint integrity including torque products, tension products and a service division which provides custom solutions ranging from straightforward rental of torque or tension equipment through full management of a bolting application using company technicians and engineers. The company has manufacturing plants and rental/sales oces in the U.S. and the U.K., and additional sales oces in Germany, The Netherlands, Brazil, and Saudi Arabia. Waukesha Bearings Corporation manufactures bearings for certain rotating machinery applications including turbo machinery, motors and generators, for use in the industrial, utility, naval and commercial marine industries. Waukesha's product lines include polymer, ceramic and magnetic designs for specic customer applications, as well as hydrodynamic bearing design applications. Its Central Research Laboratories business makes remote control manipulators for material handling applications in hazardous or sterile environments. The company operates manufacturing facilities in the U.S. and the U.K. and sales are made primarily in Europe and North America both directly and through agents in several dierent countries.

4 Graphics Microsystems manufactures color measurement and control systems for printing presses. Primary markets served are catalog, book, publication and newspaper printing. Products are designed to add economic value to printing processes by automating manual processes, providing quality control and reducing waste. Products are sold primarily in the Americas and Europe directly to printing rms as well as printing press manufacturers. SWF Companies manufacture packaging automation and robotic machinery utilized in forming, loading and sealing folding carton stock and corrugated board packaging. SWF's products are sold primarily in the U.S. through direct representation as well as indirect channels. Approximately 30% of the company's machines are installed and operated outside of North America. SWF's new modular platform products are expected to provide a more competitive oering. Eective January 1, 2005, Hill Phoenix, Belvac and SWF became part of the new Dover Systems subsidiary segment. Hill Phoenix and DI Foodservice (from Dover Industries) are the ""Food Equipment'' companies group, and SWF joins Belvac and Tipper Tie (also from Dover Industries) to become the ""Packaging Equipment'' companies group. At the same time, Mark Andy joined Imaje to form the Printing and Labeling group within Dover Technologies.

Industries Industries is comprised of twelve stand-alone operating companies that manufacture a diverse mix of equipment and components for use in the waste handling, bulk transport, automotive service, commercial food service, packaging, and construction equipment industries. A description of each stand-alone operating company is provided below. Heil Environmental manufactures a wide variety of refuse collection bodies (garbage trucks) including manual and automated side loaders, front loaders, rear loaders and a variety of recycling units. Bayne, a separately held company of Heil Environmental, manufactures container lifts for the refuse collection industry as well as for commercial applications. Both organizations sell products to municipal customers, national accounts, and independent waste haulers through a network of distributors, and directly in certain geographic areas. Also, under the Heil name, another separately held company of Heil Environmental manufactures a line of dump truck bodies/hoists for the hauling industry. Between all of these Heil Environmental organizations, products are manufactured in the U.S. for sales primarily in North America, and in the U.K. for the European market. Rotary Lift manufactures a wide range of vehicle service and storage lifts, which are sold through equipment distributors, and directly to a wide variety of markets including independent service and repair shops, national chains and franchised service facilities, new car and truck dealers, national and local governments, and government maintenance and repair locations. Rotary has manufacturing operations located in the U.S. and Germany and sells primarily in the Americas and Europe. Heil Trailer International produces a complete line of tank trailers including aluminum, stainless steel and steel trailers that carry petroleum, chemical, edible, dry bulk and waste products. Heil also manufactures specialty trailers focused on the heavy haul, oil eld, and recovery niches. Trailers are marketed both directly and indirectly through distributors to customers in the construction, trucking, railroad, oil eld, towing and recovery, and heavy haul industries, as well as to various government agencies, both domestically and internationally. Heil Trailer International has manufacturing facilities in the United States, Argentina and Thailand, as well as service facilities in the United States and the United Kingdom. Tipper Tie develops and manufactures in the U.S. and Europe a wide variety of packaging machinery which employs a clip as the means of exible package closure. These machines and clips are sold worldwide primarily for use with meat, poultry and other food products. Tipper Tie also produces a line of woven netting products used in many industries, including the meat and poultry, horticulture, Christmas tree, and environmental markets. International sales, primarily in Europe, currently generate over 60% of total sales. Marathon Equipment manufactures on-site waste management and recycling systems, including a variety of stationary compactors, roll-o hoists and vertical, horizontal and two ram balers. Equipment is manufac-

5 tured and sold primarily in the U.S. to distribution centers, malls, stadiums, arenas, hotels/motels, warehouses, oce complexes, apartment buildings, retail stores, businesses, and recycling centers. Triton manufactures a full line of ATM hardware, software and services for retail and nancial institutions. As the largest provider of retail ATMs in North America, there are more than 120,000 units installed in over 17 countries. Triton continues to pioneer innovative solutions to increase ATM functionality and lower ATM service costs. Triton's line of retail ATMs are found in numerous major retail chains and in many convenience stores, airports, hotels, oce buildings, restaurants, shopping centers, supermarkets and casinos. In the nancial institution market, Triton's line of PC-based ATMs and software packages run multi- vendor platforms, features specic to this market. PDQ Manufacturing, Inc. manufactures touch free vehicle wash systems, which are sold primarily in the U.S. and Canada to major oil companies as well as to investors. Sales are made through an industry distribution network that installs the equipment and provides after-sale service and support. DI Foodservice Companies, through its Groen, Randell, and Avtec brands, manufactures commercial foodservice cooking equipment, cook-chill production systems, refrigeration products, custom food storage and preparation products, kitchen ventilation, air handling systems and conveyer systems. DI Foodservice serves the institutional and commercial foodservice markets worldwide through its network of distributors, manufacturer's representatives, and direct sales force. The primary market for DI Foodservice products is North America. Kurz-Kasch manufactures electromagnetic products and specialty plastic components, primarily electromagnetic stators that regulate electronic fuel injectors, electronic fuel pumps for the heavy truck and automotive industries, phenolic brake pistons and electronic valve assemblies. Kurz-Kasch also manufactures specialty plastic components used in aerospace, electrical, telecommunications and other industries. All products are manufactured in the U.S. and sold directly to OEMs. Chief Automotive Systems manufactures vehicle collision measuring and repair systems, including pulling equipment and computerized measuring and inspection products. Chief markets its equipment worldwide in over 40 countries throughout Europe, Asia and the Americas, utilizing direct sales, manufacturer representatives, and distributors along with service and training organizations. Koolant Koolers manufactures standard and custom industrial liquid chillers, coolers and heat exchanger packages that extend the useful life and productivity of equipment. Chillers are used in a wide variety of applications that include the cooling of lasers, medical diagnostic equipment, spindles, ltration & heat treating equipment, water jet intensiers, spot welding machines, electronic equipment, semiconductor processing equipment, machine tools and plastic injection molding equipment. All products are manufactured in the U.S. for sale directly and through indirect sales channels in North America. Somero Enterprises manufactures highly specialized laser guided concrete screeding equipment used in the commercial construction industry. Products are built in the U.S. and sold globally through a direct sales force, sales representatives and dealers. Eective January 1, 2005, Tipper Tie and DI Foodservice became part of the Packaging and Food Equipment companies groups, respectively, at Dover Systems, a new segment subsidiary. At the same time, Kurz-Kasch and Triton, joined the new Dover Electronics segment subsidiary.

Resources Resources' twelve stand-alone operating companies manufacture components and equipment for the oil and gas production industry, petroleum retailing, rening and transportation industries, general process industries, automotive industries, recreational and o-road vehicle market, and other select commercial markets. A description of each stand-alone operating company is provided below. Warn Industries is the market leader for high performance recreational winches, winch mounts, four- wheel drive (4WD) hubs, and other accessories for 4WD vehicles, including both light trucks and all-terrain

6 vehicles (ATV). In addition, Warn provides a range of patented, technologically advanced 4WD and all-wheel drive (AWD) powertrain systems to leading automotive OEMs around the world, primarily North America. The Energy Products Group (EPG) consists of six North American operating units, US Synthetic, Norris, Alberta Oil Tool (AOT), Quartzdyne, Ferguson-Beauregard and Norriseal, which primarily serve the upstream oil and gas exploration and production industry. US Synthetic, which was acquired August 31, 2004, is a leading supplier of polycrystalline diamond cutters (PDCs) used in drill bits for oil and gas well drilling. Norris and AOT produce forged steel sucker rods and accessories, integral parts of articial lift systems used primarily in on-shore oil and gas production. Quartzdyne manufactures precision pressure transducers using proprietary quartz-resonator sensor technology to provide continuous monitoring of pressure, temperature, and ow, in ""downhole'' oil and gas exploration and production applications. Ferguson-Beauregard provides products that improve production from natural gas wells and electronic well controllers for remotely monitoring, controlling, and optimizing production from natural gas elds. Norriseal provides control valves, buttery valves, and control instrumentation primarily for oil and gas production applications and, to a lesser extent, the general industrial, rening, chemical processing, and marine markets. Sales are made directly to customers and through various distribution channels. The Energy Products Group's market is global, but sales are predominantly in North America, with the bulk of international sales occurring in South America.

OPW Fueling Components is a global leader in high quality vehicle fueling solutions. OPW oers an extensive line of fuel dispensing products including conventional, vapor recovery, and CleanEnergy (LPG, CNG, and Hydrogen) nozzles, swivels and breakaways, as well as Vaporsaver 1 Ì a tank pressure management system. OPW provides a complete line of environmental products for both aboveground and underground storage tanks, suction system equipment, exible piping, and secondary containment systems. The ECO Air products line oers an array of tire ination and vacuum systems, while its OPW Fuel Management Systems group specializes in unattended fuel management, integrated tank monitoring, and Point-of-Sale systems. OPW Fueling Component's products are marketed globally through a network of distributors and company sales oces located throughout the world.

De-Sta-Co manufactures and sells a variety of modular automation and workholding components, including manual toggle clamps, pneumatic and hydraulic clamps, automation power clamps, automation shuttles and lifters, grippers, slides, end-eectors, and other ""end of robot arm'' devices. De-Sta-Co serves the automotive, electronics, and general industrial markets from plant facilities in the U.S., Germany, Thailand, France, and Brazil, and its products are marketed globally on a direct basis and through a network of distributors.

Blackmer manufactures pumps and compressors for the transfer of liquid and gas products in a wide variety of markets, including the rened fuels, LPG, pulp & paper, wastewater, food/sanitary, military/marine, transportation, and chemical process industries. Pump technologies include positive displace- ment, sliding vane and eccentric disc pumps in addition to centrifugal process pumps. Compressor technologies include reciprocating, rotary vane, and screw compressors. Blackmer sells to OEMs directly, and to other markets through a global network of distributors, primarily in the Americas, Europe and Asia. OPW Fluid Transfer Group supplies engineered products, including valves, electronic controls, loading arms, swivels, and couplings, for the transfer, monitoring, measuring, and protection of hazardous, liquid and dry bulk commodities in the chemical, petroleum, and transportation industries. These products are manufactured in the U.S., India, Brazil and the Netherlands. OPW Fluid Transfer Group's products are sold globally, both directly and through distributors. Wilden produces a wide range of air-operated double-diaphragm pumps made of a variety of metals and engineered plastics. Wilden pumps are used in a wide variety of uid transfer applications in general industrial, process industry, and specialized applications. Sales are predominantly through distributors, with over half of Wilden's sales derived from international markets. Wilden acquired Almatec GmbH in December of 2004. Almatec is located near Dusseldorf, Germany, and it designs, manufactures and markets air-operated double- diaphragm pumps used primarily in the biopharmaceutical, chemical and electronics process industries, with its primary markets in Europe.

7 C. Lee Cook is comprised of three units: C. Lee Cook, Compressor Components (CCI), and Cook Manley. C. Lee Cook is a leading manufacturer of piston rings, seal rings, and packings for reciprocating compressors used in the natural gas production and distribution markets, and petrochemical and petroleum rening industries. These products are sold as original equipment parts to compressor manufacturers, and as aftermarket replacement parts. CCI manufactures replacement valves, rods, rings, high performance plastic bushings, and other compressor components, and provides compressor repair services through its service centers, primarily for the North American gas production and distribution markets. Cook Manley designs and manufactures engineered valves for engines and compressors and injection-molded specialty plastic components for gas compressor markets worldwide. C. Lee Cook's products are sold both directly and through various sales channels, largely in North America. Texas Hydraulics designs and manufactures highly engineered welded hydraulic cylinders for work platform, aerial utility truck, material handling, construction, and mining industry OEMs throughout North America. Through its Hydromotion subsidiary located in Spring City, Pennsylvania, Texas Hydraulics also provides custom hydraulic swivels and electric slip rings for its markets. Cylinders are manufactured in Texas and Tennessee for sale directly to customers. The Tulsa Winch Group includes Tulsa Winch, DP Manufacturing, Pullmaster Winch, and the Greer Company. The primary markets served by the group include the construction, marine, lumber, railroad, refuse, petroleum, military towing and recovery and utility markets, which are served through original equipment manufacturers and an extensive dealer network. Products manufactured by the group include worm gear and planetary winches, worm gear and planetary hoists, traction (constant pull) winches, rotation drives, speed reducers, capstan drives, high capacity bumper/winch packages, electronic monitoring systems and other related products. RPA Process Technologies designs and manufactures engineered liquid ltration equipment and systems for the petroleum rening, chemical, food & beverage, pulp and paper, hydrometallurgy, and other process industries on a global basis. The ltration product range includes mechanically self-cleaning lters, backwash- ing lters, bags and cartridge lters, belt lters, drum lters and vacuum table lters, and they are marketed and sold under the leading brand names of Ronningen-Petter, Filtres Philippe, Filtres Vernay and UCEGO. Hydro Systems manufactures chemical proportioning and dispensing systems used to dilute and dispense concentrated cleaning chemicals to the food service, health care, supermarket, institutional, school, building service contractor and industrial markets. Hydro Systems' products are generally sold to manufacturers of concentrated cleaning chemicals who market them with their branded chemicals to oer a complete chemical management system to their end user customers. Eective January 1, 2005, Hydro Systems became a part of the new Dover Electronics subsidiary segment.

Technologies Technologies is comprised of thirteen stand-alone operating companies that manufacture products in three broad groupings: Circuit Board Assembly and Test equipment (CBAT), Specialized Electronic Components (SEC), and Marking and Imaging systems. In 2004 Technologies completed three larger and three small add-on acquisitions. A description of each stand-alone operating company is provided below.

Circuit Board Assembly and Test (CBAT) Universal Instruments manufactures high-speed precision machinery used to assemble components onto printed circuit boards. Its products include thru-hole component assembly machines, surface mount placement equipment, and odd component assembly cells. It also provides complete assembly lines by integrating equipment and software required for turnkey assembly solutions. Universal manufactures in the U.S. and in China, with sales and service operations in more than 30 countries. Everett Charles Technologies (ECT) makes machines, test xtures and related products used in testing ""bare'' and ""loaded'' electronic circuit boards and semiconductors. Its products generally connect the device

8 under test to the in-circuit or functional test set. ECT also manufactures spring loaded probes which are used in many of its products and also sold separately. Machines are built in the U.S., Europe and China and test xtures are made at locations worldwide. Products are marketed directly on a worldwide basis. DEK produces high-speed precision screen printers and related tools and consumables to apply solder paste and epoxy glue to substrates at the start of the printed circuit board assembly process. Advanced applications include printing solder paste bumps onto semiconductor wafers used in the ""ip chip'' process and onto ""ball grid'' array packages. DEK manufactures in the U.K. and China and has sales/service oces throughout Europe, North America, and Asia Pacic, with a network of distributors and agents providing further support in these territories. OK International manufactures specialized and manual industrial tools for the professional electronics workbench, including precision manual soldering and desoldering tools, ball grid array rework and inspection stations, uid dispensing systems and other hand tools. Products are made at various U.S. and Chinese locations for sale to customers in the electronics, aerospace and telecom industries through sales organizations around the world that manage distributors and independent representatives. Vitronics Soltec manufactures automated soldering systems for high volume electronic circuit board manufacturing. With factories in the U.S., the Netherlands, and China, it makes wave soldering machines primarily applied to thru-hole assembly, reow soldering systems typically used for surface mount circuits and selective soldering to automatically solder specic components or provide solder connections in selective areas of printed circuit boards. Vitronics Soltec has sales and service oces in Europe, North America, and Asia, but also sells through distributors and agents. Alphasem manufactures die attach equipment to attach semiconductor die to their protective packages, providing interconnections to the next level of packaging. These ""packages'' are vital components in all kinds of simple and sophisticated electronic systems used in computers, automotive applications, space, communication devices, medical systems, and aircraft. SSE, a recent acquisition, manufactures and distributes production equipment for the semiconductor, telecom/optoelectronics and at panel display markets. Alphasem is based in Switzerland and has sales and service oces in Europe, Asia, and North America. Hover-Davis manufactures component feeders, direct die feeders, and label feeders that are used on high- speed component placement machines as part of automated circuit board assembly lines. Headquartered in Rochester, New York, Hover-Davis sells certain products directly to assembly equipment manufacturers including Universal Instruments, while other products, tting dierent assembly equipment, are being sold to end users. Sales and service is supported by a network of independent manufacturing representatives and distributors. Eective January 1, 2005, the CBAT companies were renamed the Circuit Assembly and Test (CAT) companies to better reect the broader market served.

Specialty Electronic Components (SEC) Vectron International designs and manufactures frequency control/select components and modules, employing quartz technologies. Products are manufactured at multiple locations in the U.S. and Germany and are sold to communication equipment, defense and aerospace, medical and industrial customers. In September 2004, Vectron completed the acquisition of the Corning Frequency Control business, which is expected to strengthen Vectron's position in the precision frequency generation and control industry by expanding its product oerings and capabilities to provide custom-engineered solutions to customers. Dow-Key Microwave is a specialty manufacturer of microwave electro-mechanical switches for sale to the medical, wireless, defense and aerospace industries. Design and manufacturing operations are in the U.S. and sales are made worldwide through representatives. K&L Microwave designs and manufactures radio frequency and microwave lters and integrated assemblies. K&L has manufacturing operations in the U.S. and the Dominican Republic and sells its products to communication equipment and defense and aerospace customers.

9 Novacap is a specialty manufacturer of multi-layer ceramic capacitors and planar arrays for custom high voltage, high reliability applications. It manufactures products in the U.S. and the U.K. for sale to communications, medical, defense and aerospace and automotive manufacturers. Dielectric Laboratories is a manufacturer of single and multi-layer high frequency capacitors for use in the communications, defense and automotive industries. Design and manufacturing operations are in the U.S. and sales are made worldwide through representatives. Eective January 1, 2005, the SEC companies became part of the new Dover Electronics segment.

Marking and Imaging Imaje is a major worldwide supplier of industrial marking and coding systems. Its primary product is a Continuous Ink Jet (CIJ) printer, which is used for marking variable information (such as date codes or serial numbers) on consumer products. Markpoint, acquired in 2001, added two new technologies to Imaje's product lineup: Drop on Demand (DOD) printers and thermal printers used for marking on secondary packaging such as cartons. Datamax International, acquired in December of 2004, manufactures bar code printers and related products. This acquisition will strengthen Dover's position in the Automatic Identication and Data Capture (AIDC) market. Imaje has also added laser and thermal transfer printers to its broad array of marking and coding solutions. Imaje's markets are very broad and include food, beverage, cosmetics, pharmaceutical, electronics, automotive and other applications where variable marking is required. Products are made in Europe, the U.S. and China, where Imaje engages in both printer assembly and the formulation of ink. Imaje's direct sales/service network has subsidiaries in 30 countries and sells in over 90 countries. Datamax sells primarily through distributors.

Discontinued Operations In August of 2001, the Financial Accounting Standards Board (""FASB'') issued Statement of Financial Accounting Standards (""SFAS'') No. 144, ""Accounting for the Impairment or Disposal of Long-Lived Assets,'' which was eective for scal years beginning after December 15, 2001. SFAS No. 144 establishes accounting and reporting standards for the impairment and disposal of long-lived assets and discontinued operations. The Company elected to early adopt SFAS No. 144 in 2001. The application of these standards results in the classication, and separate nancial presentation, of certain entities as discontinued operations, which are not included in continuing operations. The earnings (loss) from discontinued operations include charges to reduce these businesses to estimated fair value less costs to sell. Fair value is determined by using quoted market prices, when available, or other accepted valuation techniques. All interim and full year reporting periods have been restated to reect the discontinued operations discussed below. Please refer to Note 7 to the Consolidated Financial Statements in Item No. 8 of this Form 10-K for additional information. The Company's executive management performs periodic reviews at all of its operating companies to assess their growth prospects under its ownership based on many factors including end market conditions, nancial viability and their long term strategic plans. Based upon these reviews, management, from time to time, has concluded that some businesses had limited growth prospects under its ownership due to relevant domestic and international market conditions, ongoing nancial viability or the fact that they did not align with management's long-term strategic plans. During 2004, the Company discontinued and sold one business in the Technologies segment in the rst quarter of 2004 and sold ve businesses that were discontinued in 2003. During 2003, the Company discontinued ve businesses, three in the Diversied segment and one business in each of the Industries and Resources segments, all of which were classied as held for sale as of December 31, 2003. In aggregate, these businesses were not material to the Company's results. In 2004, these ve businesses plus one additional business were disposed of or liquidated for a net after tax loss of $2.4 million. During 2002, the Company discontinued seven businesses, four in the Technologies segment and three in the Resources segment. In 2002, two of these businesses, one from each of Technologies and Resources, were

10 sold for a net after tax loss of $4.5 million. The ve remaining businesses were classied as held for sale as of December 31, 2002. In 2003, all ve businesses were disposed of or liquidated for a net after tax gain of $4.9 million. Charges to reduce these discontinued businesses to their estimated fair values have been recorded in earnings (losses) from discontinued operations net of tax. For the years ended December 31, 2003 and 2002, pre-tax charges were recorded to write-o goodwill of $17.3 million and $31.6 million, respectively, and other long-lived asset impairments and other charges were recorded of $0.2 million and $12.3 million, respectively. No charges related to the write-o of goodwill or other long-lived asset impairments were recorded in 2004. Also during 2003, in connection with the completion of a federal income tax audit and commercial resolution of other issues, the Company adjusted certain reserves established in connection with the sales of previously discontinued operations and recorded a gain on the sales of discontinued operations net of tax of $16.6 million, and additional tax benets of $5.1 million related to losses previously incurred on sales of business. These amounts were oset by charges of $13.6 million, net of tax, to reduce discontinued businesses to their estimated fair value, and a loss on the sale of discontinued operations net of tax of $6.0 million related to contingent liabilities from previously discontinued operations. Total losses from discontinued operations in 2002 primarily relate to charges to reduce discontinued businesses to their estimated fair value.

Raw Materials Dover's operating companies use a wide variety of raw materials, primarily metals and semi-processed or nished components, which are generally available from a number of sources. As a result, shortages or the loss of any single supplier have not had, and are not likely to have, a material impact on operating prots. During 2002, steel taris were imposed on the importation of certain steel products, which had a slight adverse impact on a number of Dover operating companies that use large amounts of steel. These taris remained in eect throughout most of 2003 and were repealed late in the year. In 2004, there were meaningful increases in raw material costs, particularly steel, and higher energy costs, including an estimated increase in unrecovered steel costs of $35 million. These increases primarily aected all three of the Company's industrial segments. Although steel prices are expected to remain relatively high during 2005 and will continue to have an impact on a number of Dover operating companies, the Company expects that the overall raw material cost impact will be less in 2005 than it was in 2004.

Research and Development Dover's operating companies are encouraged to develop new products as well as to upgrade and improve existing products to satisfy customer needs, expand sales opportunities, maintain or extend competitive advantages, improve product reliability and reduce production costs. During 2004, approximately $188.3 million was spent on research and development, compared with $158.7 million and $166.2 million in 2003 and 2002, respectively. For the Technologies companies, eorts in these areas tend to be particularly signicant because the rate of product development by their customers is often quite high. In general, the Technologies companies that provide electronic assembly equipment and services can anticipate that the performance capabilities of such equipment are expected to improve signicantly over time, with a concurrent expectation of lower operating costs and increasing eciency. Signicant new product development and introduction costs were realized in 2003-2004, which are expected to moderate in 2005. Likewise, Technologies companies developing specialty electronic components for the datacom and telecom commercial markets anticipate a continuing rate of product performance improvement and reduced cost, such that product life cycles generally average less than ve years with meaningful sales price reductions over that time period. The Industries, Resources and Diversied segments contain many businesses that are also involved in important product improvement initiatives. These businesses also concentrate on working closely with customers on specic applications, expanding product lines and market applications, and continuously improving manufacturing processes. Only a few of these businesses experience the same rate of change in their markets and products that is experienced generally by the Technologies businesses.

11 Intellectual Property

The Company owns many patents, trademarks, licenses and other forms of intellectual property, which have been acquired over a number of years and, to the extent relevant, expire at various times over a number of years. A large portion of the Company's intellectual property consists of condential and proprietary information constituting trade secrets that the Company seeks to protect in various ways including condenti- ality agreements with employees and suppliers where appropriate. While the Company's intellectual property is important to its success, the loss or expiration of any signicant portion of these rights probably would not materially aect the Company or any of its segments. The Company believes that its commitment to continuous engineering improvements, new product development and improved manufacturing techniques, as well as strong sales, marketing and service eorts, are signicant to its general leadership position in the niche markets that it serves.

Seasonality

In general, Dover's operations, while not seasonal, tend to have stronger revenues in the second and third quarters. In particular, those companies serving the transportation, construction, waste hauling, petroleum, commercial refrigeration and food service markets tend to be strong during the second and third quarters. Companies serving the major equipment markets, such as power generation, chemical and processing industries, tend to have long lead times geared to seasonal, commercial or consumer demands, which tend to delay or accelerate product ordering and delivery to coincide with those market trends.

Customers

Dover's businesses serve thousands of customers, no one of which accounted for more than 10% of the Company's consolidated revenues in 2004. Within each of the four segments, no customer accounted for more than 10% of that segment's sales in 2004.

The Technologies Specialty Electronic Component (SEC) group addresses the military, space, aerospace, commercial and datacom/telecom infrastructure markets. Their customers include some of the largest customers in these markets including Raytheon (military) and Lucent, Cisco and Huawei (datacom/telecom). In addition, many of the OEM customers of the SEC group outsource their manufacturing to Electronic Manufacturing Services (EMS) companies. The Technologies' Circuit Board Assembly and Test group customers also include many of the largest global EMS companies including Jabil, Solectron, Celestica and Flextronics and the newer emerging EMS companies in China such as Foxconn, Asustek, Inventec and Wistron.

In the other Dover segments, customer concentrations are quite varied. Companies supplying the automotive and commercial refrigeration industries tend to deal with a few large customers that are signicant within those industries. This also tends to be true for companies supplying the power generation, aerospace and chemical industries. In the other markets served, there is usually a much lower concentration of customers, particularly where the companies provide a substantial number of products and services, applicable to a broad range of end use applications.

Backlog

Backlog generally is not a signicant factor in most of Dover's businesses, as most of Dover's products have relatively short order-to-delivery periods. It is more relevant to those businesses in the segments which produce larger and more sophisticated machines or have long-term government contracts, primarily in the Diversied segment as well as the Heil companies from the Industries segment and the CBAT and SEC companies from the Technologies segment. Total company backlog as of December 31, 2004 and 2003 was $1,057.4 million and $822.9 million, respectively.

12 Competition

Dover's competitive environment is complex because of the wide diversity of the products it manufactures and the markets it serves. In general, most Dover companies are market leaders which compete with only a few companies and the key competitive factors are customer service, product quality and innovation. In addition, since most of Dover's manufacturing operations are in the United States, Dover usually is a more signicant competitor domestically than in foreign markets.

In the Technologies segment, Dover competes globally against a few very large companies, primarily operating in Japan, Europe and the Far East. Its primary competitors are Japanese producers, including Fuji Machine, Panasonic and TDK, and European manufacturers like Philips and Siemens.

Within the other segments, competition is primarily domestic, although an increasing number of Dover companies see more international competitors and several serve markets which are predominantly international, particularly Belvac, Quartzdyne, RPA Process Technologies, Tipper Tie, Tranter, and Waukesha.

International

For foreign sales, export sales and an allocation of the assets of the Company's continuing operations, see Note 14 to the Consolidated Financial Statements in Item No. 8 of this Form 10-K.

Although international operations are subject to certain risks, such as price and exchange rate uctuations and foreign governmental restrictions, Dover intends to increase its expansion into foreign markets including South America, Asia and Eastern Europe.

The countries where most of Dover's foreign subsidiaries and aliates are based are France, Germany, the U.K., The Netherlands, Sweden, Switzerland and, with increased emphasis, China.

Environmental Matters

Dover believes its operations generally are in substantial compliance with applicable regulations. In a few instances, particular plants and businesses have been the subject of administrative and legal proceedings with governmental agencies or private parties relating to the discharge or potential discharge of regulated substances. Where necessary, these matters have been addressed with specic consent orders to achieve compliance. Dover believes that continued compliance will not have any material impact on the Company's nancial position going forward and will not require signicant capital expenditures.

Employees

The Company had approximately 28,100 employees as of December 31, 2004.

Other Information

Dover makes available free of charge through the ""Financial Reports'' link on its Internet website, http://www.dovercorporation.com, the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to the reports. Dover posts each of these reports on the website as soon as reasonably practicable after the report is led with the Securities and Exchange Commission. The information on the Company's Internet website is not incorporated into this Form 10-K.

13 Item 2. Properties

The number, type, location and size of the Company's properties as of December 31, 2004 are shown on the following charts, by segment: Square Footage Number and Nature of Facilities (000's) Segment Mfg. Warehouse Sales/Service Owned Leased DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45 13 39 3,396 954 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 40 13 26 4,060 736 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 71 15 36 3,395 836 TechnologiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 71 28 173 2,278 1,780

Locations Leased Facilities North Expiration Dates (Years) American European Asia Other Minimum Maximum Diversied ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 49 31 Ì 6 1 25 IndustriesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 64 13 2 3 1 10 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 71 13 3 6 1 6 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 61 68 84 39 1 18

The facilities are generally well maintained and suitable for the operations conducted. In 2005, the Company expects to make modest increases in capacity for a few businesses experiencing strong growth demands.

Item 3. Legal Proceedings

A few of the Company's subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identied under Federal and State statutes which provide for the allocation of such costs among ""potentially responsible parties.'' In each instance the extent of the Company's liability appears to be very small in relation to the total projected expenditures and the number of other ""potentially responsible parties'' involved and is anticipated to be immaterial to the Company. In addition, a few of the Company's subsidiaries are involved in ongoing remedial activities at certain plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company's products, exposure to hazardous substances or patent infringement, litigation and administrative proceedings involving employment matters, and commercial disputes. Manage- ment and legal counsel periodically review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability and extent of insurance coverage, and established reserves. While it is not possible at this time to predict the outcome of these legal actions or any need for additional reserves, in the opinion of management, based on these reviews, it is remote that the disposition of the lawsuits and the other matters mentioned above will have a material adverse eect on the Company's nancial position, results of operations, cash ows or competitive position.

Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of the Company's security holders in the last quarter of 2004.

Executive Ocers of the Registrant

All ocers are elected annually at the rst meeting of the Board of Directors following the annual meeting of stockholders and are subject to removal at any time by the Board of Directors. The executive

14 ocers of Dover as of February 28, 2005, and their positions with the Company (and, where relevant, prior business experience) for the past ve years are as follows: Name Age Positions Held and Prior Business Experience Ronald L. Homan ÏÏÏÏÏÏÏÏ 56 Chief Executive Ocer (since January 1, 2005) and President (since July 2003) of Dover; President and Chief Executive Ocer of Dover Resources, Inc. (from 2002 to 2003); Executive Vice President of Dover Resources, Inc. (from mid-2000 to 2002); and President of Tulsa Winch, Inc. (through mid-2000). Ralph S. Coppola ÏÏÏÏÏÏÏÏÏ 60 Vice President of Dover and President and Chief Executive Ocer of Dover Systems, Inc. (since October 1, 2004); prior thereto for more than ve years President, Hill Phoenix Inc. Robert G. KuhbachÏÏÏÏÏÏÏÏ 57 Vice President, Finance, Chief Financial Ocer and Treasurer (since November 2002); through December 2002 and for more than ve years prior thereto Vice President, General Counsel and Secretary of Dover. Robert A. LivingstonÏÏÏÏÏÏÏ 51 Vice President of Dover and President and Chief Executive Ocer of Dover Electronics, Inc. (since October 1, 2004); prior thereto President of Vectron International, Inc. (since January 2002); prior thereto Executive Vice President of Dover Technologies International, Inc. (since April 1998). Raymond T. McKay, Jr. ÏÏÏ 51 Vice President (since February 2004), Controller (since November 2002); prior thereto Assistant Controller, Dover (since June 1998). John E. Pomeroy ÏÏÏÏÏÏÏÏÏÏ 63 Vice President of Dover and President and Chief Executive Ocer of Dover Technologies International, Inc. George Pompetzki ÏÏÏÏÏÏÏÏÏ 52 Vice President, Taxation, of Dover (since May 2003); prior thereto for more than ve years Senior Vice President of Taxes, Siemens Corporation. David J. Ropp ÏÏÏÏÏÏÏÏÏÏÏÏ 59 Vice President of Dover and President and Chief Executive Ocer of Dover Resources, Inc. (since July 2003); prior thereto, Executive Vice President of Dover Resources, Inc. (since February 2003); prior thereto, President of OPW Fueling Components (since February 1998). Timothy J. SandkerÏÏÏÏÏÏÏÏ 56 Vice President of Dover and President and Chief Executive Ocer of Dover Industries, Inc. (since July 2003); prior thereto, Executive Vice President, Dover Industries (since April 2000); prior thereto for more than ve years, President, Rotary Lift. Joseph W. Schmidt ÏÏÏÏÏÏÏÏ 58 Vice President, General Counsel & Secretary of Dover (since January 2003); prior thereto for more than ve years partner in Coudert Brothers LLP (a multi-national law rm). William W. Spurgeon ÏÏÏÏÏÏ 46 Vice President of Dover and President and Chief Executive Ocer of Dover Diversied, Inc. (since October 1, 2004); prior thereto Executive Vice President of Dover Diversied, Inc. (since March 2004); prior thereto President of Sargent Controls & Aerospace (since October 2001); prior thereto Executive Vice President of Sargent Controls & Aerospace (since May 2000). Robert A. Tyre ÏÏÏÏÏÏÏÏÏÏÏ 60 Vice President Ì Corporate Development of Dover.

15 PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The principal market in which the Company's common stock is traded is the New York Stock Exchange. Information on the high and low sales prices of such stock, and the frequency and the amount of dividends paid during the last two years is as follows:

Dover Corporation Common Stock Cash Dividends and Market Prices(1) 2004 2003 Market Prices Dividends Market Prices Dividends High Low Per Share High Low Per Share First ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $44.13 $36.41 $.150 $31.43 $22.85 $.135 Second ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42.81 35.50 .150 34.70 23.77 .135 Third ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42.37 36.67 .160 38.79 29.17 .150 Fourth ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42.72 35.12 .160 40.45 35.22 .150 $ .62 $ .57

(1) As reported in the Wall Street Journal

The number of holders of record of the Company's Common Stock as of February 28, 2005 was approximately 14,000. This gure includes participants in the Company's 401(k) program.

On November 15, 2004 pursuant to the Dover Corporation 1996 Non-Employee Directors' Stock Compensation Plan (the ""Directors' Plan''), the Company issued an aggregate of 9,120 shares of its Common Stock to its eight outside directors (after withholding an aggregate of 3,904 additional shares to satisfy tax obligations), as compensation for serving as directors of the Company during 2004.

Under the Dover Corporation Directors' Plan as amended eective November 4, 2004, non-employee Directors receive annual compensation in an amount set from time to time by the Board, payable partly in cash and partly in common stock as such allocations may be adjusted from time to time by the Board of Directors, subject to the limitation set forth in the Directors' Plan on the maximum number of shares that may be granted to any Director in any year (10,000 shares). For 2003 and 2004, annual compensation was set at $90,000, payable 25% in cash and 75% in common stock. For 2004, the annual compensation of $90,000 was paid by $22,500 in cash and 1,628 shares of common stock, based on the fair market value of common stock on November 15, 2004.

Dover purchased a number of its shares during the fourth quarter of 2004. The shares listed below were acquired by Dover from the holders of its employee stock options when they tendered previously owned shares as full or partial payment of the exercise price of such stock options. These shares are applied against the exercise price at market price on the date of exercise. The following table depicts the purchase of these shares made during the fourth quarter of the year: (c) Total Number (d) Maximum Numbers of Shares (or (or Approximate Dollar (b) Average Units) Purchased Value) of Shares (or (a) Total Number Price Paid as Part of Publicly Units) that May Yet Be of Shares (or Per Share Announced Plans Purchased under the Period Units) Purchased (or Unit) or Programs Plans or Programs October 1 to October 31, 2004 ÏÏÏÏ 4,153 36.30 Not Applicable Not Applicable November 1 to November 30, 2004 1,917 40.67 Not Applicable Not Applicable December 1 to December 31, 2004 833 41.44 Not Applicable Not Applicable For Fourth Quarter 2004ÏÏÏÏÏÏÏÏÏ 6,903 38.13 Not Applicable Not Applicable

16 Item 6. Selected Financial Data Selected Dover Corporation nancial information for the years 2000 through 2004 is set forth in the following 5-year Consolidated Table. 2004 2003 2002 2001 2000 (In thousands, except per share gures) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,488,112 4,413,296 4,053,593 4,223,245 4,889,035 Net earnings from continuing operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 409,140 285,216 207,846(1) 178,236(2) 497,483(3) Net earnings (losses) per common share: Basic Ì Continuing operationsÏÏÏÏÏÏÏ $ 2.01 1.41 1.02 0.88 2.45 Ì Discontinued operations ÏÏÏÏÏ 0.02 0.04 0.17 0.34 0.11 Ì Total net earnings before cumulative eect of change in accounting principleÏÏÏÏÏÏÏÏÏ 2.03 1.45 0.85 1.22 2.56 Ì Cumulative eect of change in accounting principle ÏÏÏÏÏÏ Ì Ì (1.45) Ì Ì Ì Net earnings (losses) ÏÏÏÏÏÏÏ $ 2.03 1.45 (0.60) 1.22 2.56 Diluted Ì Continuing operationsÏÏÏÏÏÏÏ $ 2.00 1.40 1.02 0.87 2.43 Ì Discontinued operations ÏÏÏÏÏ 0.02 0.04 (0.18) 0.35 0.11 Ì Total net earnings before cumulative eect of change in accounting principleÏÏÏÏÏÏÏÏÏ 2.02 1.44 0.84 1.22 2.54 Ì Cumulative eect of change in accounting principle ÏÏÏÏÏÏ Ì Ì (1.44) Ì Ì Ì Net earnings (losses) ÏÏÏÏÏÏÏ $ 2.02 1.44 (0.60) 1.22 2.54 Dividends per common share ÏÏÏÏÏÏÏ $ .62 .57 .54 .52 .48 Weighted average number of common shares outstanding: Ì BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 203,275 202,576 202,571 202,925 202,971 Ì Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 204,786 203,614 203,346 204,013 204,677 Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 107,434 96,400 96,417 158,773 177,823 Depreciation and amortization ÏÏÏÏÏÏ $ 160,845 151,309 156,946 207,845 178,485 Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,781,358 4,995,373 4,280,383 4,368,345 4,371,068 Total debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,092,328 1,067,585 1,054,058 1,075,172 1,471,968

All results and data in this section reect continuing operations, which exclude discontinued operations unless otherwise noted. (1) Includes pre-tax restructuring charges of $28.7 million and inventory charges of $12.0 million. (2) Includes pre-tax restructuring charges of $17.2 million and inventory charges of $63.8 million. (3) Includes pre-tax gain on sale of marketable securities of $13.7 million.

17 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 2004 Compared with 2003 Summary Sales for 2004 of $5,488.1 million were up $1,074.8 million or 24% from 2003, primarily driven by increases of $396.9 million at Technologies and $354.6 million at Resources. Technologies' sales were impacted by positive trends in the global electronics industry, particularly in the back-end semiconductor market, as well as expansion of the Chinese manufacturing capacity. Resources' sales increased due to improved market conditions and the full year impact of the 2003 acquisition of Warn Industries. Industries' sales increased $181.2 million and Diversied's sales increased by $142.6 million. Sales would have increased 20.9% to $5,336.9 million if 2003 foreign currency translation rates were applied to 2004 results. Acquisitions completed during 2004 contributed $104.1 million to sales and contributed gross prot of $38.6 million. Gross prot of $1,894.4 million in 2004 represented a 25% increase compared to $1,520.4 million in 2003. Gross prot margins for both 2004 and 2003 were 34.5% as volume increases in the current year were oset by rising commodity prices. Selling and administrative expenses for 2004 were $1,282.2 million or 23% of net sales, compared to $1,076.7 million or 24% of net sales in 2003. The increase in selling and administration expenses includes the costs related to Sarbanes-Oxley requirements and increases in compensation and pension benets. Operating prot of $612.2 million for 2004 increased $168.4 million compared to the prior year due primarily to the 24% increase in revenues, benets from the Company's restructuring programs undertaken during 2002 and 2001, and slightly improved global economic conditions. Operating prot margin for 2004 was 11.2% compared to 10.1% for 2003. Net interest expense decreased 1% to $61.3 million for 2004, compared to $62.2 million for 2003. The primary reason for the decrease in net interest expense was income related to the Company's outstanding interest rate swaps related to a portion of its long-term debt. Other net income for 2004 was $1.2 million and includes gains on dispositions, favorable settlements and miscellaneous credits of $9.9 million which were largely oset by foreign exchange losses of $8.7 million. Other expenses of $9.7 million for 2003 primarily related to foreign exchange losses of $6.2 million. The foreign exchange losses in both 2004 and 2003 primarily relate to appreciation of the Euro against the U.S. dollar. Dover's eective 2004 tax rate for continuing operations was 25.9% compared to the 2003 rate of 23.3%. The low eective tax rate for both years is largely due to the continuing benet from tax credit programs such as those for R&E combined with the benet from U.S. export programs, lower eective foreign tax rates from the utilization of net operating loss carry forwards and the recognition of certain capital loss benets which were higher in 2003. Net earnings from continuing operations for 2004 were $409.1 million or $2.00 per diluted share compared to $285.2 million or $1.40 per diluted share from continuing operations in 2003. For 2004, net earnings before cumulative eect of change in accounting principle were $412.8 million or $2.02 per diluted share, including $3.6 million or $.02 per diluted share in earnings from discontinued operations, compared to $292.9 million or $1.44 per diluted share for 2003, which included $7.7 million or $.04 per diluted share in earnings from discontinued operations. Discontinued operations earnings for 2004 were $3.6 million compared to earnings of $7.7 million in 2003. During 2003, in connection with the completion of a federal income tax audit and commercial resolution of other issues, the Company adjusted certain reserves, established in connection with the sales of previously discontinued operations, and recorded a gain on the sales of discontinued operations net of tax of $16.6 million, and additional tax benets of $5.1 million related to losses previously incurred on sales of business. These amounts were oset by charges of $13.6 million, net of tax, to reduce discontinued businesses to their estimated fair value, and a loss on the sale of discontinued operations net of tax of $6.0 million related to contingent liabilities from previously discontinued operations. Total losses from discontinued operations in

18 2002 primarily relate to charges to reduce discontinued businesses to their estimated fair value. Please refer to Note 7 in the Consolidated Financial Statements in Item 8.

For 2002, the impact of the adoption of the Statement of Financial Accounting Standard No. 142, ""Goodwill and Other Intangible Assets,'' resulted in a net loss of $121.3 million. The adoption resulted in a goodwill impairment charge of $345.1 million ($293.0 million, net of tax, or $1.44 diluted earnings per share). The adoption of the standard also discontinued the amortization of goodwill eective January 1, 2002. There were no goodwill impairments charges in 2004 and 2003.

Diversied Twelve Months Ended December 31, 2004 2003 % Change (In thousands, unaudited) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,310,835 $1,168,256 12% Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 149,779 131,867 14% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.4% 11.3% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,412,384 1,161,012 22% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.08 0.99 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 440,583 334,349 32%

Diversied's earnings increased 14% on a 12% sales increase, as capital equipment markets improved throughout the year. The earnings increase was achieved mainly through higher sales volumes, new products and successful marketing programs. Most of the companies, especially SWEP, Tranter PHE and Hill Phoenix, were negatively aected by signicantly increased raw material prices. Crenlo, Mark Andy, Graphics Microsystems, and Hydratight Sweeney accounted for most of the earnings gain, which was somewhat oset by declines at SWF and Belvac. Segment bookings improved 22% over prior year, and Diversied enters 2005 with a record year-end backlog.

Hill Phoenix reported record sales and bookings, and earnings were the second best ever at 3% below last year's record. Despite slower overall market conditions and consolidations in the supermarket industry, Hill Phoenix continues to grow sales through expansion of its customer base by oering industry-leading product innovations and strong customer service. Earnings at Refrigeration Systems and National Cooler both exceeded last year. These increases were oset by lower earnings at Display Cases, which was heavily impacted by the unprecedented rise in commodity costs and a slow down in new construction and remodels by two of its major customers. Margins were down slightly as the rise in material prices outpaced the businesses' ability to increase prices or fully oset them with cost-reduction initiatives. Revenue growth is expected to continue in 2005 as Hill Phoenix nished the year with its highest backlog in three years.

Sargent reported record sales, fueled by the continued recovery of the commercial and defense aerospace markets. Earnings improved 10%, however margins were negatively impacted by start-up investments in a facility in Mexico and increased operational support for Sargent Canada's 89% volume increase. Raw material availability and increasing cost remained a challenge at all business units, especially at Sonic. Record bookings improved 23% over prior year, led by the Marine Division being awarded a large U.S. military order for a submarine ship set.

Performance Motorsports produced excellent operating leverage as earnings increased 15% on a 4% sales increase. Their performance was driven by the recovery of the automotive racing and powersports markets, the addition of new customers and improved operating eciency. Earnings records were set at three of their business units, JE Pistons, ProX and Carrillo. JE Pistons and Carrillo achieved market share gains with a number of NASCAR racing teams, while ProX beneted from new products and improved distribution. Wiseco's margins declined as a result of manufacturing ineciencies associated with the shift from 2-cycle to 4-cycle pistons. Performance Motorsports exceeded prior year sales, earnings and margins in every quarter of 2004.

19 SWEP achieved record bookings, sales and earnings, while margins decreased slightly due to signicant material cost increases. Order activity was steady throughout the year in both its heat pump and boiler markets, and production capacity was increased with both capital investments and productivity programs to meet the growing demand. Earnings were up 12%, driven by volume increases, cost reduction and favorable currency rates. Due to brisk sales in Asia, the plant in Malaysia increased production volume by almost 100% for the year.

Tranter PHE set new bookings and sales records in 2004, though earnings dropped below last year by 2%. Earnings beneted from the higher sales volume, but were more than oset by signicantly increased stainless steel and titanium prices and costs associated with the implementation of a new business system. Prior investment made in its low-cost facility in India produced increased capacity and allowed it to double output in 2004. Margins improved signicantly in the fourth quarter, due to an improved sales mix, better pricing and a reduced workforce. Tranter PHE has had success in selling to new markets such as ethanol plants in the U.S. and processing plants in Brazil.

Belvac nished the year with at sales compared to 2003. Earnings were down 16% due to investments in product development, start-up costs associated with opening a new facility in the Czech Republic, and increases in commodity costs. Bookings, especially in the second half, were very strong and increased by 41% for the full year. The increase in bookings is related to a growing requirement for can size diversity, conversions in can top sizes, and growth in the European market. A signicant portion of its business includes spares and retrots that improve productivity of its customer's equipment. Backlog at year-end was at its highest point in seven years and was 72% higher than the prior year.

Crenlo achieved record bookings and sales, due to increased cab volumes with key customers in the construction/agriculture equipment market. In addition to the higher volume, its earnings and margins increased signicantly as a result of solid execution of its performance improvement plan. Although steel costs continued to be a signicant issue, it was able to pass through the majority of the price increase to its customers. Its specialty enclosure business reported at sales and earnings for the year. Crenlo's backlog increased each quarter, and ended the year at 49% above 2003.

Mark Andy's results were much improved over prior year, as it achieved record sales and bookings and more than doubled earnings. Signicant growth in label press orders were driven by the strength of the Euro, U.S. tax incentives and improvements in sales strategies. A number of new product introductions in both the Mark Andy and Comco product lines have enhanced its technology leadership position in the industry. Growth was seen in both the domestic and international markets, and indications are that it has taken market share from competitors.

Hydratight Sweeney had a record year, as earnings grew 57% on a sales gain of 23%. Its tension and service business drove the performance with strong sales to the robust oil and gas markets, especially in the North Sea and the Middle East. Both its Morgrip and Hevilift product lines made strong contributions to its results in 2004. The Torque business unit's results were down to prior year due to low hydraulic sales, partially oset by increased industrial and aero sales, especially to military customers.

Waukesha Bearings reported slightly lower earnings on at sales as the power generation market is experiencing a slow recovery. However, its oil and gas markets continue to be buoyant and are expected to remain strong in 2005. The decline in earnings is primarily the result of signicant one-time charges associated with a warranty reserve, employee redundancy and recruitment costs, and a write-down of a facility held for sale, partially oset by a favorable legal settlement. Bookings and backlog were up due to a large order in the nuclear equipment market for its CRL business unit.

Graphics Microsystems had an outstanding year with record bookings, sales and earnings, as it won signicant business from six new key customers for its color and ink control products. It has been successful at changing its business model, moving its customer base from small and medium size printers in the aftermarket to large printers and the high-end new press OEM market. A new product was added, ribbon control, which was successfully approved by an OEM customer as the standard for its presses. A sizeable R&D operation was

20 established in India, which directly contributed to Graphics Microsystems' market growth by improving software quality and the overall development process. SWF had a disappointing year, with declines in sales and a loss for the year. Results continued to be adversely aected by high warranty costs and product development expenses. The lack of sustained bookings at a level for ecient production was another signicant negative factor in its performance. Although market activity improved, the closing cycle for capital investment in packaging automation continued to increase. The acquisition of GSMA Systems in March of 2004 increased the company's capabilities by being able to provide robotic solutions to complex handling problems.

Industries Twelve Months Ended December 31, 2004 2003 % Change (In thousands, unaudited) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,221,178 $1,039,930 17% Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 138,359 121,200 14% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.3% 11.7% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,255,104 1,105,046 14% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.03 1.06 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 238,954 201,866 18% Dover Industries sales increased 17% reecting continued market share gains helped by considerable new product introductions. Sales have now increased for seven consecutive quarters. Earnings grew 14%, driven by sales gains but were oset by rising steel prices. The largest contributors to earnings increases were Heil Environmental due to share gains and Chief Automotive which beneted from new product introductions. Heil Environmental's performance improved versus 2003 despite signicant steel cost increases, as a small decline in the Refuse Collection Vehicle market was oset by market share gains. An increase in buying in municipal markets, increases in market share within the national account segment, further penetration into the independent hauler segment, and an active New York City market drove revenues to double-digit gains. Bayne, a 2001 acquisition, also contributed with record performance during the year driven primarily by newly gained distribution. Heil's European business grew as well, increasing market share in the municipal market. Rotary Lift delivered improved sales driven partially by market share gains in the important 2-post segment of the market, although much of the increase in revenues was due to new product categories introduced in the latter half of 2003 that carry lower margins. Earnings were also hampered by escalating steel costs and margin pressures from low-cost Asian imports. Rotary continues to focus on providing productivity- based solutions, which has partially insulated it from severe pricing pressures seen at the commodity end of the business. Rotary's European operations, enhanced by the acquisition of Blitz in mid-2003, delivered double digit gains in their rst full year as Rotary Lift Europe. Total Rotary year-end backlog is up over 40% compared to 2003. Heil Trailer, the only global manufacturer of tank trailers, recovered from a weak 2003. A stronger US tank market, improved results in Argentina due to pent-up demand in the Argentine and surrounding economies, and strong governmental sales at Kalyn Siebert drove the favorable comparisons. However, a stagnant Asian market hurt by ambivalent enforcement of truck weight limits, plant shut-down expenses in the UK, and material cost escalations partially oset this gain. Revenues were positively impacted by a full year of military shipments, although rising steel costs impacted protability. Tipper Tie reported its best results in over four years. Tipper's international operations, which account for 60% of sales, had another strong year, building from 2003's solid results. Despite weakness in the German market, the result of a consolidating retail environment, international sales increased over 10% driven by strength in Eastern Europe, primarily Russia, Poland, Romania, Hungary and the Baltic states. Alpina, a Swiss company acquired in 2000, delivered record sales and earnings surpassing its record performance in

21 2003. The US business rebounded moderately amid continued pricing pressures. Tipper Tie beneted from strength in the European currencies which was oset by increased aluminum costs.

Marathon delivered record sales driven by strength across its product line. Recycling products had a strong year as baler sales increased behind new product introductions and product redesigns. Marathon increased its market share due in part to a large one-time order from a national account, by leveraging its broad product line, and by focusing engineering eorts on identifying customer needs. This has led to increased new product activity that will continue into 2005. Accordingly, backlogs are up 19%.

Investments in products for major retail, nancial institutions, and global customers drove Triton's sales to the highest level in its history. During the year, Triton produced its 100,000thATM while achieving sales of over 20,000 units. This year marked the transition from serving primarily low-end retail ATM markets to becoming a player in the mid to high-end market of major retail and nancial institutions. Costs associated with these endeavors hampered margins, but set the stage for positive returns in 2005 and beyond. In Canada, unit sales were at an all time high, while European unit sales climbed over 30%.

PDQ's revenues were at with the prior year as the ""in bay automatic' domestic market held relatively at throughout the year. After a relatively strong start to the year, poor weather and rising gas prices were negative inuences on orders, which began to fall o in the third quarter. Sales to major oil companies were up for the year, but investor sales were at as hurricanes and heavy rain reduced near-term car wash volume and therefore made current investors reconsider their replacement and expansion plans for the year. New products introduced during the year were well received. Both the G5 S-Series, a higher-end Laser wash, and the Access machine, a wash activation unit, delivered sales gains in excess of 50% but were not enough to make up for a less active jobber market.

DI Foodservice, which includes Groen, Randell, and Avtec, reported a revenue decline and a 70% decline in earnings. Continued weakness in municipal spending negatively impacted the institutional equipment market for the third consecutive year. 2004 saw numerous chain restaurant new-store openings being delayed or put on hold. Earnings results were also impacted by a number of adverse accrual adjustments that occurred during the year. A management change has been implemented, and performance is expected to improve in 2005.

Kurz-Kasch's revenues increased over 40% in 2004, primarily driven by the eect of the acquisition of Wabash Magnetics at the end of 2003. Strong specialty plastics sales oset weakness in stator sales. Performance at Wabash was above expectations driven primarily by strength in its irrigation markets. Prots at Kurz-Kasch Consolidated increased over 2003 levels, but were impacted by unfavorable product mix and plant closing costs associated with the Wabash acquisition.

Despite a continued soft economy, consolidation of the auto repair market, rising steel prices, and insurance industry trends negatively impacting the collision industry, Chief delivered its best performance since 2001. Rebounding from a dicult year in 2003, Chief grew sales and earnings at double digit rates fueled by the introduction of new pulling products and a 75% increase in measuring equipment unit sales.

Somero grew sales and earnings as the introduction of two new products contributed to gains both domestically and internationally. The SXP large screed was developed to replace the original laser screed machine and sales of large screeds doubled from 2003 levels. The Copperhead XD, a product that primarily serves the upper deck and smaller oor concrete screeding markets, was improved to add more power and torque and contributed to an 18% sales gain in Copperhead revenue. International sales increased to 30% of total revenue, driven by new market penetration in Europe and Australia.

Koolant Koolers rode a recovery in the machine tool industry and posted double digit sales and earnings gains. In addition, Koolant Koolers continued its diversication into other markets and applications, making signicant inroads into the food processing market in 2004. At Schreiber, a recovery in the plastics and welding markets was partially oset by a slowdown in medical shipments.

22 Resources Twelve Months Ended December 31, 2004 2003 % Change (In thousands, unaudited) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,337,229 $982,658 36% Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 216,291 136,851 58% Operating marginsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16.2% 13.9% BookingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,394,810 990,057 41% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.04 1.01 BacklogÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 163,460 104,395 57% Dover Resources' 2004 sales increased 36%, or $355 million, to $1,337 million primarily due to relatively strong conditions in markets served by Dover Resources companies. The strength was most prevalent in those companies in the oil and gas equipment group (Energy Products Group and C. Lee Cook) and those in the material handling group (Tulsa Winch, Texas Hydraulics, and Warn) that serve the construction equipment, mobile crane, recovery vehicle, and power sports markets. All 12 Resources companies increased bookings versus 2003 and Dover Resources ended the year with a backlog that was 57% above prior year. Earnings increased by 58%, or $79 million to $216 million and operating margins increased 2.3 points to 16.2%. Warn, which was acquired on October 1, 2003, continued to generate strong growth and earnings in the rst full year as a Dover company. Warn experienced record sales in power sports products, strong growth in its branded truck products, and continued growth in powertrain products driven by increased demand for light trucks and sport utility vehicles. Sales increases of 22% generated earnings increases of 13%, which included the impact of increased material costs that could not be immediately passed on to OEM customers. The new WARN Works» line of lifting and pulling products gained market acceptance at two major home improvement retailers. The continued ow of new products at Warn is expected to fuel future growth. The Energy Products Group nancials include four months of the results of US Synthetic, which was acquired on August 31, 2004. 2004 was a strong year for the Energy Products Group in terms of sales and earnings growth. The business did an excellent job of osetting material price increases and managing through dicult issues of material shortages. OPW Fueling Components continued to grow both sales and earnings, a result of continued expansion of new environmental regulations, as well as an increase in retail service station construction and remodeling. OPW also beneted from the opening of a new manufacturing facility in China and an expanded presence in Brazil. The business generated signicant cost savings from its global sourcing eorts and continued expansion of its Six Sigma quality process. OPW Fluid Transfer Group increased earnings 26% on a 22% sales increase and had strong performance at each of its business units. The rail tank car market experienced stronger growth than recent years and was a factor in the improved results at Midland. Civacon, Engineered Systems, and European operations all saw improvement in their transportation and loading equipment markets. The Group continued to strengthen its global presence with the expansion into Brazil. The synergy generated across its business units outside the U.S. has been a driver of international growth. Wilden grew both sales and earnings in 2004 with exceptionally good growth outside the U.S. Sales increased 8%, excluding the impact of the Almatec acquisition, which was completed on December 17, 2004. Blackmer beneted from restructuring and consolidation initiatives in 2003. The business generated strong earnings leverage as a result of these initiatives and from actions to grow revenue. Earnings increased signicantly on a sales increase of 13%. Blackmer's French operations also had a strong year with increases in sales and earnings resulting from initiatives to further expand its presence outside of France. De-Sta-Co leveraged an 8% sales increase into a very strong earnings performance. Most of De-Sta-Co's markets were solid in 2004 with strong growth in robotics tooling and through major industrial catalog sales.

23 These strengths were dampened by slow growth in the automotive tooling and work holding markets. Germany was a solid contributor to the improved business results, due in part to a weaker U.S. dollar. The Tulsa Winch Group achieved record sales in 2004 with positive market conditions in most segments served by Tulsa Winch. In particular, the petroleum, military, construction equipment, and mobile crane markets rebounded in early 2004 and provided increased opportunities for growth. The business has been able to realize synergy in sales and engineering from the acquisitions of DP, Pullmaster, and Greer, which were acquired in 2000. The product synergies are expected to provide even more growth opportunities as electronic sensing is further expanded across the traditional mechanical and hydraulic winch product oering. Texas Hydraulics experienced record bookings in 2004 and was challenged to overcome capacity constraints and material cost and availability issues. To accommodate both sales and earnings increases of over 60%, Texas Hydraulics undertook a number of improvements, including further expansion of ""lean concepts,'' selective outsourcing and capital investments, which have proven to be positive factors. The company is now positioned to benet from these improvements in 2005. C. Lee Cook generated a 21% earnings improvement on a 7% sales increase. The markets served by Cook (gas compression and transmission) were exceptionally strong in 2004, both in the OEM equipment and the maintenance and service sectors. Even though Cook had a facility destroyed by a re in January 2004, the business was able to recover and get back into operation without a loss of customers or protability. Hydro Systems nished 2004 on a strong note and for the full year achieved an earnings increase of 5% on a sales increase of 7%. Results were dampened by a legal settlement in early 2004. The business achieved strong results from its European operations, beneted from a downsizing in one of its U.S. facilities, and has begun to see growth in its newly established Brazil business. RPA Process Technologies completed a year of ""rebuilding.'' After implementing a restructuring of its French operations in mid-2004, the business returned to protability in the second half of 2004. The business achieved record levels of bookings in 2004 and has a backlog that exceeds 40% of its sales plan for 2005. There are still challenges facing the business in terms of global positioning and the need to re-invigorate the product oering, but the management team is clearly focused on making the necessary changes.

Technologies Twelve Months Ended December 31, 2004 2003 % Change (In thousands, unaudited) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,628,135 $1,231,241 32% Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 162,198 84,763 91% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.0% 6.9% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,612,722 1,275,598 26% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.99 1.04 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 215,157 182,427 18% Technologies sales increased to $1,628 million, a 32% increase over 2003. Earnings increased $77 million or 91%. The overall electronics industry continued its recovery, which commenced in 2003. Particularly strong was the mid-year activity in the back-end semiconductor markets. However, by the fourth quarter, the semiconductor and related markets had slowed signicantly as did the level of Chinese contract manufacturers' capital expenditures.

Marking and Coding Imaje had record sales (up 16%) and earnings (up 7%) and continues to see growth in all of its product areas: Continuous Ink Jet (CIJ) applications in primary packaging and Drop on Demand (DOD) and Thermal Transfer on Line (TTOL) applications in secondary packaging and large character printing. CIJ unit volume for the year was at a record level although non-CIJ products are becoming an increasing percentage of

24 Imaje's business. The newly released Print & Apply product is being very well-received in the market. The industrial markets served by Imaje and its competitors continue to be very competitive with pressure on pricing. Imaje continues to invest in globalizing its infrastructure. During 2004, Imaje opened a new and larger manufacturing facility in Shanghai, China, relocated from Xiamen, China. In addition, during December, Imaje completed the acquisition of Datamax International, a Florida-based manufacturer of bar code printers, which will operate as a separate business unit. As this acquisition closed near year end, Datamax had very little impact on the sales and earnings of Imaje for 2004.

Circuit Board Assembly and Test (CBAT) Twelve Months Ended December 31, 2004 2003 % Change (In thousands, unaudited) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,037,470 $731,749 42% Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 116,559 43,691 167% Operating marginsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.2% 6.0% BookingsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,014,865 760,923 33% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.98 1.04 BacklogÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 110,281 107,036 3% Technologies' CBAT businesses reported earnings of $117 million, an increase of $73 million or 167%. Sales increased 42% to $1,037 million, while bookings increased 33% to $1,015 million. Most of this growth came from the companies serving the back-end semiconductor markets (ECT and Alphasem) and from new technology requirements in solder paste management and soddering (DEK and Vitronics Soltec). Everett Charles Technologies (ECT) had an excellent year. Sales increased 62% while earnings increased 129%. ECT acquired the test handling company Rasco GmbH in June 2004. Rasco contributed approximately 16% of the overall growth in sales and 35% of the growth in earnings. All areas of ECT performed well, in particular all of its divisions serving the back end semiconductor markets and its Probe division, although business activity fell o considerably during the fourth quarter. Universal Instruments saw an increase in both sales and prots over 2003. Universal's second half roll out of new products is beginning to see market acceptance in competitive situations although margin improvement is still a challenge. There still remain some transition challenges for 2005, but year end activity indicates a potential for growing market share. DEK reported a strong year with sales increases of 50%, resulting in an earnings increase of 352%. Even with the strong growth, the strengthening of the UK currency had a negative impact on its margins as a signicant portion of its operating costs are in the United Kingdom. DEK continues to focus on increasing its recurring revenue base of consumable products Ì stencils, spare parts and other process support products. Vitronics Soltec performed very well in 2004. Sales and earnings not only grew 67% and 425%, respectively, but exceeded the record sales and earnings level of 2000. Vitronics Soltec is gaining market share due to its leadership role in lead free soldering, strong market acceptance of its selective soldering machines, and its product breadth that addresses the specic needs of the North American, European and Asian markets. Despite the signicant fall o in the integrated circuit segment of the die-attach equipment market during the second half of 2004, Alphasem was able to expand its business in the memory, chip attach and special application segments, resulting in sales growth of 75% and earnings improvement of 106% over the prior year. The acquisition of SSE GmbH in June 2004 has increased Alphasem's ability to serve special applications. OK International reported a 20% increase in sales, and a 9% operating margin, up from a 1.5% margin in 2003. The improvement is in part due to it having completed the restructuring of its domestic operations into a

25 single manufacturing facility in southern California, further development of its China manufacturing platform and roll out of a new low-cost soldering system.

Hover-Davis increased sales 49% and had positive earnings for the current year compared to a small loss in 2003. This growth was attributed primarily to its circuit assembly feeders. Though not contributing signicantly this year, label feeders and direct die feeders are expected to increase their contribution to the sales and earnings of Hover-Davis in 2005.

Specialty Electronic Components (SEC) Twelve Months Ended December 31, 2004 2003 % Change (In thousands, unaudited) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $257,168 $211,575 22% Earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,637 7,289 115% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.1% 3.4% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 260,661 221,145 18% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.01 1.05 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 70,771 53,074 33%

In Technologies' SEC companies, sales for the year were $257.2 million compared to $211.6 million last year, an increase of 21.6%. Excluding 2004 acquisitions and divestitures, sales were up 11.1% with stronger demand from communication equipment customers, which peaked in the second quarter of 2004.

Earnings improved signicantly to $15.6 million compared to $7.3 million last year. During the rst half of 2004, SEC margins showed continuous improvement over 2003, but peaked in the second quarter. The decline in shipments during the second half of 2004, the downsizing charges at some companies, and high insurance charges resulted in second half margins of only 4%. Cost reduction/containment, strong sales/product management and integration activities are the areas of focus for management entering 2005.

Vectron reported an increase in sales of 31% for the year inclusive of acquisition and divestiture activities. Excluding the impact of these activities, Vectron saw double digit sales growth. Vectron's earnings for the year increased by 57% compared to 2003 mostly from the revenue gains on the old Vectron business. In September 2004, Vectron completed the acquisition of Corning Frequency Control. This acquisition strengthens Vectron's position in the precision frequency generation and control industry (primarily wireless telecom customers) by expanding Vectron's product oerings and capabilities to provide custom-engineered solutions to customers.

The capacitor companies, Novacap and Dielectric, recorded a combined sales increase of 22%. Sales of the capacitor companies were enhanced by the acquisition of Voltronics in May 2004. Voltronics primarily serves the medical imaging market which remained strong through the second half of 2004, osetting the weakness experienced by Novacap and Dielectric from communication equipment customers. However, pricing pressure from customers in Asia and the impact of non-recurring insurance charges led to an overall decline in earnings at the capacitor companies.

K&L Microwave posted a loss in 2004, down from the loss realized in 2003, but still reective of an organization and structure that had not been adequately sized for current business levels. Operational realignment charges impacted 2004 earnings in the third quarter. K&L posted a prot in the fourth quarter as a result of this realignment.

Dow Key, which has a strong military and aerospace business, ended the year with an 9% earnings gain on at sales. The company experienced strong bookings in the second half of 2004, which boosted its backlog going into 2005.

26 Critical Accounting Policies The Company's consolidated nancial statements and related public nancial information are based on the application of generally accepted accounting principles in the United States of America (""GAAP''). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also aect supplemental information contained in the public disclosures of the Company, including information regarding contingencies, risk and its nancial condition. The Company believes its use of estimates and underlying accounting assumptions conform to GAAP and are consistently applied. Valuations based on estimates are reviewed for reasonableness on a consistent basis throughout the Company. Primary areas where the nancial information of Dover is subject to the use of estimates, assumptions and the application of judgment include the following areas. Revenue is recognized and earned when all of the following circumstances are satised: a) persuasive evidence of an arrangement exists, b) price is xed or determinable, c) collectibility is reasonably assured and d) delivery has occurred. In revenue transactions where installation is required, revenue can be recognized when the installation obligation is not essential to the functionality of the delivered products. Revenue transactions involving non-essential installation obligations are those which can generally be completed in a short period of time, at insignicant cost and the skills required to complete these installations are not unique to the Company and in many cases can be provided by third parties or the customers. If the installation obligation is essential to the functionality of the delivered product, revenues are deferred until installation is complete. In a limited number of revenue transactions, other post shipment obligations such as training and customer acceptance are required and, accordingly, revenues are deferred until the customer is obligated to pay, or acceptance has been conrmed. Service revenues are recognized and earned when services are performed and are not signicant to any period presented. Allowances for doubtful accounts are estimated at the individual operating companies based on estimates of losses related to customer receivable balances. Estimates are developed by using standard quantitative measures based on historical losses, adjusting for current economic conditions and, in some cases, evaluating specic customer accounts for risk of loss. The establishment of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances. Though Dover considers these balances adequate and proper, changes in economic conditions in specic markets in which the Company operates could have a material eect on reserve balances required. In times of rapid market decline, such as aected a number of Technologies' companies in 2001 and 2002, reserve balances need to be adjusted in response to these unusual circumstances. Inventory for the majority of the Company's subsidiaries, including all international subsidiaries and the Technologies segment, are stated at the lower of cost, determined on the rst-in, rst-out (FIFO) basis, or market. Other domestic inventory is stated at cost, determined on the last-in, rst-out (LIFO) basis, which is less than market value. Under certain market conditions, estimates and judgments regarding the valuation of inventory are employed by the Company to properly value inventory. Technologies companies tend to experience higher levels of inventory value uctuations, particularly given the relatively high rate of product obsolescence over relatively short periods of time. Occasionally, the Company will establish restructuring reserves at an operation in accordance with appropriate accounting principles. These reserves, for both severance and exit costs, require the use of estimates. Though Dover believes that these estimates accurately reect the anticipated costs, actual results may be dierent than the estimated amounts. Dover has signicant tangible and intangible assets on its balance sheet that include goodwill and other intangibles related to acquisitions. The valuation and classication of these assets and the assignment of useful depreciation and amortization lives involves signicant judgments and the use of estimates. The testing of these intangibles under established accounting guidelines (including SFAS No. 142) for impairment also requires signicant use of judgment and assumptions, particularly as it relates to the identication of reporting units and the determination of fair market value. Dover's assets and reporting units are tested and reviewed for impairment on an annual basis during the fourth quarter or when there is a signicant change in

27 circumstances. The Company believes that its use of estimates and assumptions are reasonable and comply with generally accepted accounting principles. Changes in business conditions could potentially require future adjustments to these valuations. The valuation of Dover's pension and other post-retirement plans requires the use of assumptions and estimates that are used to develop actuarial valuations of expenses and assets/liabilities. These assumptions include discount rates, investment returns, projected salary increases and benets, and mortality rates. The actuarial assumptions used in Dover's pension reporting are reviewed annually and compared with external benchmarks to assure that they accurately account for Dover's future pension obligations. Changes in assumptions and future investment returns could potentially have a material impact on Dover's pension expenses and related funding requirements. Dover's expected long-term rate of return on plan assets is reviewed annually based on actual returns and portfolio allocation. Dover has signicant amounts of deferred tax assets that are reviewed for recoverability and valued accordingly. These assets are evaluated by using estimates of future taxable income streams and the impact of tax planning strategies. Reserves are also estimated for ongoing audits regarding federal, state and international issues that are currently unresolved. The Company routinely monitors the potential impact of these situations and believes that it is properly reserved. Valuations related to tax accruals and assets can be impacted by changes in accounting regulations, changes in tax codes and rulings, changes in statutory tax rates and the Company's future taxable income levels. Dover has signicant accruals and reserves related to its risk management program. These accruals require the use of estimates and judgment with regard to risk exposure and ultimate liability. The Company estimates losses under these programs using actuarial assumptions, Dover's experience, and relevant industry data. Dover considers the current level of accruals and reserves adequate relative to current market conditions and Company experience. Dover has established reserves for environmental and legal contingencies at both the operating company and corporate levels. A signicant amount of judgment and use of estimates is required to quantify Dover's ultimate exposure in these matters. The valuation of reserves for contingencies is reviewed on a quarterly basis at the operating and corporate levels to assure that Dover is properly reserved. Reserve balances are adjusted to account for changes in circumstances for ongoing issues and the establishment of additional reserves for emerging issues. While Dover believes that the current level of reserves is adequate, future changes in circumstances could impact these determinations. The Company from time to time will discontinue certain operations for various reasons. Estimates are used to adjust, if necessary, the assets and liabilities of discontinued operations to their estimated fair value less costs to sell. These estimates include assumptions relating to the proceeds anticipated as a result of the sale. The adjustments to fair market value of these operations provide the basis for the gain or loss when sold. Changes in business conditions or the inability to sell an operation could potentially require future adjustments to these estimates.

Liquidity and Capital Resources Management assesses the Company's liquidity in terms of its ability to generate cash to fund its operating, investing and nancing activities. Signicant factors aecting liquidity are: cash ows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, adequacy of commercial paper and available bank lines of credit and the ability to attract long-term capital with satisfactory terms. The Company continues to generate substantial cash from operations and remains in a strong nancial position, with enough liquidity available for reinvestment in existing businesses and strategic acquisitions while managing the capital structure on a short and long-term basis.

28 The following table is derived from the Consolidated Statements of Cash Flows: Twelve Months Ended December 31, Cash Flows from Operations 2004 2003 (In thousands, unaudited) Cash ows provided by operating activitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 597,447 $ 577,366 Cash ows (used in) investing activitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (524,853) (435,238) Cash ows (used in) nancing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (100,950) (98,281) Cash ow provided from operating activities during 2004 were up 4.2% compared to 2003. Increases in cash ows from operations were primarily driven by increased net earnings of $119.9 million in 2004, while $104.6 million in tax refunds were received in 2003. Cash used in investing activities for 2004 rose to $524.9 million from the prior year, reecting an increase in acquisition activity from the prior year. The acquisition expenditures for 2004 were $506.1 million compared to $362.1 million in 2003 as the Company completed eight new purchases. The Company is hopeful that 2005 acquisition activity will be consistent with the 2004 level but that will depend largely upon the availability and pricing of appropriate acquisition candidates. Capital expenditures of $107.4 million for the year were $11.0 million higher than in 2003. Capital expenditures during 2004 and 2003 were funded by internal cash ow. Capital expenditures for 2005 are expected to increase over 2004 levels. Cash used in nancing activities during 2004 and 2003 were essentially at. Dividends paid of $126.1 million in 2004 were the primary use of the cash for nancing activities in 2004. Cash used in nancing activities during 2003 primarily reected a net $13.5 million increase of debt and dividend payments of $115.5 million. During 2004, Dover repaid approximately $9 million of long-term debt and had $65 million of commercial paper outstanding as of December 31, 2004. In addition to measuring its cash ow generation and usage based upon the operating, investing and nancing classications included in the Consolidated Statements of Cash Flow, the Company also measures free cash ow. Management believes that free cash ow is an important measure of operating performance because it provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions and repay debt. Dover's free cash ow for 2004 and 2003 remained essentially at including a large tax refund in 2003. The following table is a reconciliation of free cash ow with cash ows from operating activities: Twelve Months Ended December 31, Free Cash Flow 2004 2003 (In thousands, unaudited) Cash ow provided by operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 597,447 $ 573,366 Less: Capital expenditures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (107,434) (96,400) Dividends to stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(126,060) (115,504) Free cash ow ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 363,953 $ 361,462

The Company's cash and cash equivalents decreased 3% during 2004 to $358 million at December 31, 2004, compared to $370 million at December 31, 2003. Adjusted working capital (calculated as accounts receivable, plus inventory, less accounts payable) increased from December 31, 2003 by $220.9 million or 20.0% to $1,324 million, primarily driven by increases in receivables of $165.1 million to $912.7 million and increases in inventory of $136.4 million to $775.7 million, oset by increases in payables of $80.6 million to $364.4 million. Excluding the impact of acquisitions on working capital of $105.4 million and changes in foreign currency of $33.2 million, working capital increased by $82.1 million or 7.4% from December 31, 2003. Increases in receivables were driven by acquisitions of $49.8 million, increases due to foreign currency uctuations of $31.1 million and increased sales activity. Inventory balances increases were driven by acquisitions of $70.5 million, increases due to foreign currency

29 uctuations of $18.7 million and increases due to operational eorts to build up inventory for the ramping up of production, particularly in the Technologies segment. Increases in accounts payable were driven by acquisitions of $15.0 million, foreign currency uctuations of $16.6 million and a concerted eort by management to better align the payable cycle with the Company's cash receipts cycle.

Other assets and deferred charges remained essentially at and were $195.7 million as of December 31, 2004.

At December 31, 2004, the Company's net property, plant, and equipment amounted to $756.7 million compared to $717.9 million at the end of the preceding year. The increase in net property, plant and equipment reected acquisitions of $63.2 million, capital expenditures of $107.4 million and increases related to foreign currency uctuation of $17.4 million, oset by depreciation.

Goodwill and intangible assets increased $305.1 million and $154.2 million, respectively. Increases were primarily driven by acquisitions which resulted in goodwill of $278.7 million and intangible assets of $158.6 million and uctuations in foreign currency exchange rates of $26.4 million, oset by amortization.

The aggregate of current and deferred income tax assets and liabilities increased from $330.8 million net deferred tax liability at the beginning of the year to $429.7 million at year-end. This resulted primarily from the increase in deferrals related to intangible assets ($278.7 acquisition-related), oset by increases in deferred tax assets from accrued compensation.

Current accrued expenses increased $49.5 million to $471.4 million at December 31, 2004. Increases during 2004 related to increased accrued compensation and employee benets of $30.3 million, increased insurance accruals of $18.0 million and increases in other accrued expenses of $.7 million.

Retained earnings increased from $3,342.0 million at the beginning of 2004 to $3,628.7 million at December 31, 2004. The $286.7 million increase resulted from 2004 net earnings of $412.8 million, reduced by cash dividends which aggregated $126.1 million. Stockholders' equity increased from $2,742.7 million to $3,118.7 million. The $376.0 million increase resulted mainly from the increase in retained earnings and increased equity adjustments related to foreign currency translation of $75.5 million.

Dover's consolidated pension benet obligation increased by $33.2 million in 2004. The increase was due principally to plan amendments related to increased participation in the supplemental benet plan. In addition, plan assets increased $15.5 million due to gains on plan investments during the year which were partially oset by payout of benets. During 2004, plan amendments created an increase in the benet obligation of $26.0 million. Due to the decrease in the net funded status of the plans and the increase in the amortization of unrecognized losses, it is estimated that pension expense will increase from $15.9 to approximately $24.9 million in 2005. The Company anticipates discretionary contributions to its pension benet plans of $32 million in 2005, including supplemental benets.

The Company utilizes the total debt and net debt to total capitalization calculations to assess its overall nancial leverage and believes the calculations are useful to its stockholders for the same reasons. The total debt level of $1,092.3 million as of December 31, 2004 increased $24.7 million from December 31, 2003 as a result of drawing down approximately $25 million more of short-term commercial paper. As of December 31, 2004, net debt of $734.5 million represented 19.1% of total capital, a decrease of 1.1 percentage points from December 31, 2003. Borrowings under the Company's commercial paper program were minimal throughout 2004, never exceeding $65 million during the year. Commercial paper outstanding as of December 31, 2004 and 2003 was $65 million and $40 million, respectively. In November 2005, the Company is scheduled to repay $250 million of long term debt.

30 The following table reconciles net debt and net debt to total capitalization: December 31, December 31, Net Debt to Total Capitalization Ratio 2004 2003 (In thousands, unaudited) Current maturities of long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 252,677 $ 3,266 Commercial paper and other short-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,588 60,403 Long-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 753,063 1,003,915 Total debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,092,328 1,067,584 Less: Cash, equivalents and marketable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 357,803 371,397 Net debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 734,525 696,187 Add: Stockholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,118,682 2,742,671 Total capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,853,207 $3,438,858 Net debt to total capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19.1% 20.2% On September 8, 2004, the Company entered into a $600 million ve-year unsecured revolving credit facility with a syndicate of fteen banks. The Credit Agreement replaced an existing 364-day credit facility and a 3-year credit facility in the same aggregate principal amount and on substantially the same terms and is intended to be used primarily as liquidity back-up for the Company's commercial paper program. As described above, the Credit Agreement has a ve-year term, whereas the prior facilities had respective terms of 364 days and three years and would otherwise have expired in October 2004 and October 2005, respectively. The Company has not drawn down any loan under the Credit Agreement, and does not anticipate doing so, and as of December 31, 2004, had commercial paper outstanding in the principal amount of $65 million. At the Company's election, loans under the Credit Agreement will bear interest at a Eurodollar or alternative currency rate based on LIBOR, plus an applicable margin ranging from 0.19% to 0.60% (subject to adjustment based on the rating accorded the Company's senior unsecured debt by S&P and Moody's), or at a base rate pursuant to a formula dened in the Credit Agreement. In addition, the Company will pay a facility fee and a utilization fee in certain circumstances, as described in the Credit Agreement. The Credit Agreement imposes various restrictions on the Company that are substantially identical to those in the replaced facilities. Among other things, the Credit Agreement generally requires the Company to maintain an interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.5 to 1. The Company is and has been in compliance with this covenant and the ratio was 12.6 to 1 as of December 31, 2004, and 9.4 to 1 as of December 31, 2003. The Company established a Canadian Credit Facility in November of 2002 with the Bank of Nova Scotia. Under the terms of this Credit Agreement, the Company has a Canadian (CAD) $30 million bank credit availability and has the option to borrow in either Canadian Dollars or U.S. Dollars. At December 31, 2004 and 2003, the outstanding borrowings under this facility were approximately CAD $21 million and U.S. $17 million, respectively. The covenants and interest rates under this facility match those of the primary $600 million revolving credit facility. The Canadian Credit Facility was renewed for an additional year prior to its expiration date of November 25, 2004, and now expires on November 22, 2005. The Company intends to replace the Canadian Credit Facility on or before its expiration date. The primary purpose of this agreement is to facilitate borrowings in Canada for ecient cash and tax planning. The Company may, from time to time, enter into interest rate swap agreements to manage its exposure to interest rate changes. Interest rate swaps are agreements to exchange xed and variable rate payments based on notional principal amounts. As of December 31, 2004, the Company had three interest rate swaps outstanding for a total notional amount of $150.0 million, designated as fair value hedges of part of the $150.0 million 6.25% Notes due on June 1, 2008, to exchange xed-rate interest for variable-rate interest. There was no hedge ineectiveness as of December 31, 2004 and the aggregate fair value of these interest rate swaps of $0.7 million determined through market quotation was reported in other assets and long-term debt. During the rst quarter of 2004, the Company terminated an interest rate swap with a notional amount of $50.0 million for an immaterial gain, which is being recognized over the remaining term of the debt issuance.

31 This interest rate swap was designated as a fair value hedge of the 6.25% Notes, due June 1, 2008. During the second quarter of 2004, Dover entered into an interest rate swap with a notional amount of $50.0 million, at more favorable rates to replace the interest rate swap terminated during the rst quarter. This interest rate swap is designated as a fair value hedge of the 6.25% Notes due June 1, 2008. The swap is designated in a foreign currency and exchanges xed-rate interest for variable-rate interest, which also hedges a portion of the Company's net investment in foreign operations. Subsequent to December 31, 2004, one interest rate swap with a notional amount of $50.0 million was terminated with no material impact to the Company. Dover's long-term debt instruments had a book value of $1,005.7 million on December 31, 2004 and a fair value of approximately $1,093.0 million. On December 31, 2003, the Company's long-term debt instruments had a book value of $1,007.2 million and a fair value of approximately $1,103.0 million. Management is not aware of any potential impairment to the Company's liquidity, and the Company is in compliance with all its long-term debt covenants. It is anticipated that in 2005 any funding requirements above cash generated from operations will be met through the issuance of commercial paper or, depending upon market conditions, through the issuance of long-term debt or some combination of the two. The Company's credit ratings are as follows for the years ended December 31: 2004 2003 Short Term Long Term Short Term Long Term Moody's ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ P-1 A1 P-1 A1 Standard & Poor'sÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ A-1 A A-1 A Fitch ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ F1 A F1 A A summary of the Company's undiscounted long-term debt, commitments and obligations as of December 31, 2004 and the years when these obligations come due is as follows: Total 2005 2006 2007 2008 Thereafter (In thousands) Long-term debt ÏÏÏÏÏÏÏÏ $1,005,740 $252,677 $ 1,621 $ 463 $150,806 $600,173 Rental commitmentsÏÏÏÏ 147,437 36,475 28,715 22,872 14,270 45,105 Purchase obligations ÏÏÏÏ 82,858 80,276 1,779 784 19 Ì Capital leasesÏÏÏÏÏÏÏÏÏÏ 8,031 3,546 2,619 677 131 1,058 Other long-term obligations ÏÏÏÏÏÏÏÏÏÏ 4,844 762 738 364 360 2,620 Total obligations ÏÏÏÏÏÏÏ $1,248,910 $373,736 $35,472 $25,160 $165,586 $648,956

The Company believes that existing sources of liquidity are adequate to meet anticipated funding needs at comparable risk-based interest rates for the foreseeable future. Acquisition spending would increase company debt but management anticipates that the debt to capital ratio will remain generally consistent with historical levels. Operating cash ow and access to capital markets are expected to satisfy the Company's various cash ow requirements, including acquisition spending and pension funding as needed.

New Accounting Standards In July 2002, the Financial Accounting Standards Board (""FASB'') issued SFAS No. 146, ""Accounting for Costs Associated with Exit or Disposal Activities,'' which is eective for exit and disposal activities initiated after December 31, 2002. The standard replaces EITF Issue 94-3 and requires companies to recognize costs associated with exit or disposal activities when they are incurred, as dened in SFAS No. 146, rather than at the date of a commitment to an exit or disposal plan. The provisions of SFAS 146 are to be applied prospectively. The eect of the adoption of SFAS No. 146 was immaterial to the Company's consolidated results of operations and nancial position. In November of 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), ""Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of

32 Others, an interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34.'' FIN 45 claries the requirements of FASB Statement No. 5, ""Accounting for Contingencies,'' relating to the guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure requirements of FIN 45 are eective for nancial statements of interim or annual periods that end after December 15, 2002 and have been incorporated into the footnotes. The provisions for initial recognition and measurement are eective on a prospective basis for guarantees that are issued or modied after December 31, 2002, irrespective of the guarantor's year-end. FIN 45 requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under that guarantee. The eect of the adoption of FIN 45 was immaterial to the Company's consolidated results of operations and nancial position. The Company has also adopted the disclosure requirements of FIN 45.

In December of 2002, the FASB issued SFAS No. 148, ""Accounting for Stock-Based Compensation- Transition and Disclosure Ì an amendment of SFAS 123,'' which is eective for scal years ending after December 15, 2002 regarding certain disclosure requirements which have been incorporated into the footnotes. This Statement amends FASB Statement No. 123, ""Accounting for Stock-Based Compensation,'' to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that Statement to require prominent disclosure about the eects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation. Finally, this Statement amends APB Opinion No. 28, ""Interim Financial Reporting,'' to require disclosure about those eects in interim nancial information. The eect of the adoption of SFAS No. 148 had no impact on the Company's consolidated results of operations or nancial position.

In January 2003, FASB Interpretation No. 46 (FIN 46), ""Consolidation of Variable Interest Entities'' was issued. FIN 46 provides guidance on consolidating variable interest entities and applies immediately to variable interests created after January 31, 2003. In December 2003, the FASB revised and superseded FIN 46 with the issuance of FIN 46R in order to address certain implementation issues that were adopted the rst reporting period ending after March 15, 2004. The interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sucient to permit an entity to nance its activities without support from other parties or the equity investors lack certain specied characteristics. The eect of the adoption of FIN 46 was immaterial to the Company's consolidated results of operations and nancial position.

In May 2003, the FASB issued SFAS No. 150, ""Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.'' SFAS No. 150 establishes standards for how an issuer classies and measures certain nancial instruments with characteristics of both liabilities and equity. SFAS No. 150 applies specically to a number of nancial instruments that companies have historically presented within their nancial statements either as equity or between the liabilities section and the equity section, rather than as liabilities. SFAS No. 150 is eective for nancial instruments entered into or modied after May 31, 2003, and otherwise is eective at the beginning of the rst interim period beginning after June 15, 2003. The eect of the adoption of SFAS No. 150 was immaterial to the Company's consolidated results of operations and nancial position.

In December 2003, the Securities and Exchange Commission issued Sta Accounting Bulletin No. 104 (SAB 104), Revenue Recognition. SAB 104 supersedes SAB 101, Revenue Recognition in Financial Statements, to include the guidance from Emerging Issues Task Force EITF 00-21 ""Accounting for Revenue Arrangements with Multiple Deliverables.'' The adoption of SAB 104 did not have a material eect on the Company's consolidated results of operations or nancial position.

In December 2003, the FASB published a revision to SFAS No. 132 ""Employers' Disclosure about Pensions and Other Postretirement Benets an amendment of FASB Statements No. 87, 88, and 106.'' SFAS No. 132R requires additional disclosures to those in the original SFAS No. 132 about the assets, obligations, cash ows, and net periodic benet cost of dened benet pension plans and other dened benet postretirement plans. The provisions of SFAS No. 132 remain in eect until the provisions of SFAS No. 132R are adopted. SFAS No. 132R is eective for nancial statements with scal years ending after December 15,

33 2003. The adoption of SFAS No. 132R did not have a material impact on the Company's consolidated results of operations or nancial position. In May 2004, the FASB issued FASB Sta Position No. FAS 106-2 (FSP 106-2), ""Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,'' which supersedes FSP 106-1. FSP 106-2 provides guidance on the accounting for the eects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the ""Act'') for employers that sponsor postretirement health care plans that provide prescription drug benets. It also requires certain disclosures regarding the eect of the federal subsidy provided by the Act. This FSP is eective for the rst interim or annual period beginning after June 15, 2004. The eect of adoption has not been material to the Company's results of operations, cash ow or nancial position. In November of 2004, the FASB issued SFAS No. 151, ""Inventory Costs,'' an amendment of ARB No. 43, Chapter 4 ""Inventory Pricing.'' SFAS No. 151 adopts the IASB view related to inventories that abnormal amounts of idle capacity and spoilage costs should be excluded from the cost of inventory and expensed when incurred. The provisions of SFAS No. 151 are applicable to inventory costs incurred during scal years beginning after June 15, 2005. The eect of the adoption of SFAS No. 151 will be immaterial to the Company's consolidated results of operations and nancial position. In December of 2004, the FASB issued SFAS No. 123R, ""Share-Based Payment.'' SFAS No. 123R revises previously issued SFAS 123 ""Accounting for Stock-Based Compensation,'' supersedes Accounting Principles Board (APB) Opinion No. 25 ""Accounting for Stock Issued to Employees,'' and amends SFAS Statement No. 95 ""Statement of Cash Flows.'' SFAS No. 123R requires the Company to expense the fair value of employee stock options and other forms of stock-based compensation for the interim or annual periods beginning after June 15, 2005. The share-based award must be classied as equity or as a liability and the compensation cost is measured based on the fair value of the award at the date of the grant. In addition, liability awards will be re-measured at fair value each reporting period. The eect of the adoption of SFAS No. 123R will not be materially dierent from the pro-forma results included in Note 1 Stock-Based Compensation.

2003 Compared with 2002 Summary Sales for 2003 of $4,413.3 million were up $359.7 million or 9% from 2002, primarily driven by increases of $194.8 million at Technologies and $109.8 million at Resources. Technologies' sales were impacted by recovery in the electronics industry. Resources' sales increased due to improved market conditions and the acquisition of Warn Industries. Diversied's sales increased $52.5 million, while Industries' sales were essentially at. Sales would have increased 4.6% to $4,238.1 million if 2002 foreign currency translation rates were applied to 2003 results. Acquisitions completed during 2003 contributed $67.7 million to sales and contributed gross prot of $18.4 million. Gross prot of $1,520.4 million in 2003 represented a 14% improvement compared to $1,330.9 million in 2002. Gross prot for 2002 included approximately $12.0 million of inventory provisions primarily incurred by Technologies and, to a lesser extent, Diversied. Gross prot margins of 34.5% for 2003 compared to 32.8% for 2002 and were positively impacted by increased volume levels and the prior year's operational realignment and restructuring. Selling and administrative expenses for 2003 were $1,076.7 million or 24% of net sales, compared to $996.2 million or 25% of net sales in 2002. Selling and administrative expenses for 2002 included approximately $28.7 million of restructuring provisions primarily incurred by Technologies and to a lesser extent Industries and Diversied. Operating prot of $443.8 million for 2003 increased $109.0 million compared to the prior year due primarily to the 9% increase in revenues, benets from the Company's restructuring programs undertaken during 2002 and 2001 and slightly improved global economic conditions. Operating prot margin for 2003 was 10.1% compared to 8.3% for 2002. Net interest expense decreased 4% to $62.2 million for 2003, compared to $64.8 million for 2002. The primary reasons for the decrease in net interest expense were the decrease in long-term debt during the year of

34 approximately $26 million, higher levels of interest bearing cash equivalents, and interest income related to the Company's outstanding interest rate swaps on some of its long-term debt. Other net expenses for 2003 were $9.7 million and primarily related to foreign exchange losses of $6.2 million and legal settlements at the Industries and Resources segments. Other expenses of $6.6 million for 2002 primarily related to foreign exchange losses of $6.0 million. The foreign exchange losses in both 2003 and 2002 primarily relate to appreciation of the Euro against the U.S. dollar. Dover's eective 2003 tax rate for continuing operations was 23.3%, compared to 2002's rate of 21.1%. The low eective tax rate for both years is largely due to the continuing benet from tax credit programs such as those for R&E combined with the benet from U.S. export programs, lower eective foreign tax rates from the utilization of net operating loss carryforwards and the recognition of certain capital loss benets. Net earnings from continuing operations for 2003 were $285.2 million or $1.40 per diluted share compared to $207.8 million or $1.02 per diluted share from continuing operations in 2002. For 2003, net earnings before cumulative eect of change in accounting principle were $292.9 million or $1.44 per diluted share, including $7.7 million or $.04 per diluted share in earnings from discontinued operations, compared to $171.8 million or $.84 per diluted share for 2002, which included $36.1 million or $.18 per diluted share in losses from discontinued operations. Discontinued operations earnings for 2003 were $7.7 million compared to losses of $36.1 million in 2002. During 2003, in connection with the completion of a federal income tax audit and commercial resolution of other issues, the Company adjusted certain reserves, established in connection with the sales of previously discontinued operations and recorded a gain on the sales of discontinued operations net of tax of $16.6 million, and additional tax benets of $5.1 million related to losses previously incurred on sales of business. These amounts were oset by charges of $13.6 million, net of tax, to reduce discontinued businesses to their estimated fair value, and a loss on the sale of discontinued operations net of tax of $6.0 million related to contingent liabilities from previously discontinued operations. Total losses from discontinued operations in 2002 and 2001 primarily relate to charges to reduce discontinued businesses to their estimated fair value. Please refer to Note 7 in the Consolidated Financial Statements in Item 8. For 2002, the impact of the adoption of the Statement of Financial Accounting Standard No. 142, ""Goodwill and Other Intangible Assets,'' resulted in a net loss of $121.3 million. The adoption resulted in a goodwill impairment charge of $345.1 million ($293.0 million, net of tax, or $1.44 diluted earnings per share). The adoption of the standard also discontinued the amortization of goodwill eective January 1, 2002.

Diversied Twelve Months Ended December 31, 2003 2002 % Change (In thousands) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,168,256 $1,115,776 5% EarningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 131,867 127,454 3% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.3% 11.4% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,161,012 1,082,316 7% Book-to-BillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.99 0.97 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 334,349 331,234 1% Diversied's earnings increased 3% in 2003 on a 5% sales increase, as capital equipment markets remained soft. The earnings increase was achieved mainly through operational improvements, volume and cost reduction eorts. Record segment bookings improved 7% over the prior year. Hill Phoenix, SWEP and Belvac accounted for a large portion of the earnings gain, which was somewhat oset by declines at Waukesha, Performance Motorsports, Graphics Microsystems and Crenlo. In 2003, Hill Phoenix reported its second consecutive record year, setting new highs in sales, earnings and cash ow, again leading Diversied in each of these three categories. Despite its overall market being down,

35 Hill Phoenix beneted from growth at several of its largest customers as well as securing new key accounts. Hill Phoenix has been able to outperform its competition and gain market share in recent years, due largely to industry leading product innovation and strong customer service. The improvement was across all its business units, as Display Cases, Refrigeration Systems, National Cooler and EDP all showed a year-over-year earnings increase. A three point operating margin improvement was achieved, largely the result of leveraging value-added pricing and productivity gains. All growth in 2003 and 2002 was internal, as there were no acquisitions impacting results. Sargent's earnings were slightly down compared to the prior year, as strong military business and a successful add-on acquisition were oset by the extended commercial aerospace downturn. Record bookings improved 32% over the prior year, led by the Marine Division being awarded a large U.S. military order for submarine ship sets. Margins fell in 2003 largely due to an unfavorable sales mix and the decision to invest in several development programs. The Sonic business unit was hurt by continued airline cutbacks and a signicant reduction in production at their largest customer. Sargent Aerospace Canada, a manufacturer of airplane components in Montreal, Canada, was acquired in April and produced positive results throughout the year. Performance Motorsports' earnings declined for the rst time since being acquired by Diversied in 1998, due to several production issues and a weak powersports market. Performance Motorsports struggled throughout the year integrating its December 2002 acquisition of Chambon, where volumes declined and signicant losses resulted. Perfect Bore absorbed high production costs and also reported a loss, due to lingering production problems resulting from internalizing a key manufacturing process that had previously been outsourced. Performance Motorsports' two largest business units, Wiseco and JE Pistons, both had steady years and reported sales and earnings slightly ahead of prior year. After four consecutive quarters of unfavorable comparisons to the prior year, Performance Motorsports saw order intake increase in the fourth quarter and earnings improved over the prior year. Despite market softness in 2003, Performance Motorsports maintained its market share and was well positioned to improve as its markets recovered. SWEP exceeded prior year bookings, sales, and earnings in every quarter in 2003. Though the year started slow, order activity improved in both its heat pump and boiler markets and was very strong in the last nine months of the year. Production capacity was increased with both capital investments and productivity programs to meet the growing demand. Backlog at the end of 2003 was 67% above last year. Earnings were up 60% on a 24% increase in sales, driven by cost reduction, favorable currency rates, and a robust market. Its new central warehouse in Germany was fully consolidated in 2003, which drove down lead times and reduced selling and administrative expenses. Though the price of stainless steel dropped slightly late in the year, potential increases in metal prices threatened to aect near term margins. In 2003, Belvac reported its highest earnings in ve years, improving 64% over the prior year. As the only independent global supplier of can forming equipment, Belvac's recent success was in the non-U.S. market, especially Russia and Australia, where can manufacturing and consumer use is growing. A signicant portion of its business includes spares and retrots that improve the productivity of its customer's equipment. Further investment and advancement in its plastic container equipment was beginning to complement its can forming business, and opening up new opportunities for growth. In 2003, Belvac began the process of establishing a warehouse, service center and related supply chains in the Czech Republic. Waukesha had a strong nish to the year, but still recorded a 15% earnings decline on a 6% drop in revenue. The weak power generation market continued to negatively impact the Bearings division, and costs to close its South Carolina facility further reduced earnings. This was the third time in two years that Bearings down-sized its capacity due to the soft market demand. On a positive note, the Magnetics Bearing group had a record year in sales and earnings as project development work began to show a payback. After a slow start to the year, the Hydratight Sweeney division had a solid comeback in the last three quarters on strong Torque and Service business. The Tension business was down for the year, though bookings in its Oil & Gas markets improved in the fourth quarter setting a good foundation for 2004. Central Research Labs' sales and earnings were signicantly down as orders for a number of large nuclear waste clean-up projects were delayed into 2004. CRL continues to develop the use of their products with large OEM's in the pharmaceutical markets.

36 Tranter PHE set new bookings and sales records in 2003, though earnings dropped below 2002 by 6%. Marine bookings came back strong especially with shipyards in South Korea. Another solid contributor was the North America ethanol market that is being driven by investments in alternative energy sources. Favorable currency translations due to the weakening of the dollar and higher Eurasian business also increased reported sales. Investments were made in the India operations to add manufacturing and engineering capability to make welded products for the Eurasia market. This facility attained the highest quality approvals for its industry in 2003: PED (Pressure Equipment Directive) for Europe, and ASME (American Society of Mechanical Engineers) for North America. Signicant gains in productivity, reduced lead times and on-time delivery in the Swedish manufacturing operations were also achieved.

Mark Andy earnings declined 12% on slightly lower sales, as cost reduction eorts did not oset weaker gross margins. An unfavorable product mix, production start-up problems on a new label press, and higher warranty expenses caused lower earnings in the St. Louis operations. Results improved at year-end with fourth quarter earnings contributing over half of the year's total earnings. The package printing equipment market further weakened in 2003 but began to see some rming late in the year. After a short rebound in label press orders in 2002, bookings declined 13% in 2003. Comco packaging press orders were at in 2003, although 2003 ended with its best quarterly bookings performance since the acquisition in early 2001. Improvements in sales coverage, upgrades in sales personnel, and worldwide sales organization changes were made to strengthen its position. Both U.S. operations received ISO certication and lean manufacturing initiatives continued to drive improvement.

Crenlo followed 2002's substantial turnaround with lower earnings despite slightly increased volume. Earnings were down due to an unfavorable sales mix, rising medical, natural gas and wage costs, and costs associated with projects that will generate future revenue. The unfavorable sales mix is attributable to a decline in the specialty enclosure business, which has been negatively impacted by a large customer's restructuring following a merger. The South Carolina facility continued to be hurt by under-leveraged xed costs and high overtime, resulting in the inability to reach consistent production levels. On a positive note, cost reductions and productivity gains achieved in 2003 positioned Crenlo to capitalize on higher volumes. Increased order activity in the fourth quarter by several key customers provided cautious optimism for 2004, as shipment levels for the rst quarter were projected to be higher.

Graphics Microsystem's (GMI) sales grew 3% over 2002, despite the third consecutive year of a decline in the printing industry. The ColorQuick product set a new sales record and required a re-alignment of its business resource and processes. GMI decided to target large growth opportunities and shifted its business model from serving only small to medium size printers in the aftermarket to a focus on large printers and the high end new press OEM market. 2003 earnings were negatively aected by necessary investments in R&D, price concessions, and technical service to pursue this new business.

SWF completed a year of transition, reporting breakeven results as several key managers were replaced and plant consolidations were nalized. Facilities in Florida and Washington were consolidated into the California operation, resulting in overhead cost reduction and business simplication going forward. Several large warranty issues were resolved in 2003, and new warranty claims steadily declined throughout the year. Positive strides were made operationally, including the introduction of laser machining capabilities, formally establishing preferred suppliers, restructuring the sales and engineering organizations and the introduction of integrated work groups. The internal improvements achieved in 2003, SWF to be more externally focused in 2004.

37 Industries Twelve Months Ended December 31, 2003 2002 % Change (In thousands) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,039,930 $1,034,714 1% EarningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 121,200 137,547 (12)% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.7% 13.3% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,105,046 995,552 11% Book-to-BillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.06 0.96 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 201,866 119,881 68% Industries earned 12% less on essentially at sales, reecting plant closing costs and margin pressure from earlier in the year. Nevertheless, quarterly sales and earnings improved sequentially as the year progressed. Fourth quarter results topped the previous three quarters, reecting market share increases and improved market conditions across the majority of companies. The biggest contributors to earnings increases were PDQ, with strong new product sales and Tipper Tie which beneted from strong overseas performance, capitalizing on the opening of the Eastern European markets. 2003 was a challenging year for Heil Environmental. Earnings were down 30% as its market declined over 20%, resulting in the lowest industry volume since 1997. Municipal markets remained weak and pricing pressures continued. Environmental closed down a facility and consolidated their two parts businesses. Performance increased in the second half, as both the third and fourth quarters showed favorable comparisons to prior year, and full year bookings and backlog were up reecting favorable year over year comparisons. Overseas, Heil was able to leverage a strong UK market while increasing share. Rotary Lift's 2003 sales were enhanced by the May 2003 acquisition of Blitz, a German lift manufacturer. However, integrating the existing Rotary Lift Italian operations into Blitz negatively impacted earnings. North American sales fell slightly as the industry declined and competitive pressures led to contracting margins. For the full year, Rotary Lift's sales grew 5% and earnings were at. However, a number of new products were introduced in the latter half of the year, resulting in sales growth of over 8% in the second half. Backlog was up over 50%, leading to optimism heading into 2004. Industry declines impacted Heil Trailer, as the U.S. tank trailer markets decreased for the fourth consecutive year. Reacting to the contraction, Trailer closed two facilities during 2003. Despite continued price competition, Trailer was able to grow share in both the petroleum and dry bulk markets. Business began to pick up later in the year, as fourth quarter revenues in 2003 were 16% above 2002 levels. Military shipments began in earnest in the fourth quarter of 2003, and will account for an additional $20.0 million of sales in 2004, the result of a military contract awarded to Heil in late 2003. Kalyn Siebert, a Heil Trailer subsidiary, beneted from this strong military volume as revenues almost doubled for the year. Tipper Tie's European operations achieved record sales driven by strong performance in Eastern Europe. Earnings improved 21% on a sales increase of 9%. Alpina, a 2000 acquisition, surpassed 2003's record results as it continued to expand its product line into new geographic regions. The U.S. business continued to be challenged amid a weak capital equipment market and continued pricing pressure. Marathon's sales and margins declined three percentage points in 2003 which were primarily the result of pricing pressures driven by market weakness. The waste equipment market was down, adjusting to the overcapacity of production in the industry, ultimately leading to price erosion. As a result, Marathon closed a facility while reducing headcount by over 10%. Strength in their Recycling Systems Group helped stem the tide, and was viewed as a key growth area for 2004. Triton, which saw signicant improvement in 2002, delivered record revenues in 2003, although earnings were relatively at because of new product start-up costs. Unit sales were up over 10% in a at U.S. market, resulting in share gains again in 2003. These gains were attributable to the success of the 9100 product line, which was introduced in mid-2002 and focuses on the broadest segment of the cash dispenser market. It represented more than two thirds of 2003 unit sales volume. Triton's strong new product focus continued in 2003, as two key products were introduced late in the year. The FT5000 is a through-the-wall model aimed at the nancial institution market, while the RL5000 is aimed principally at the retail market. Internationally,

38 both the UK and Canadian markets remained strong, and market share increased in both of these key focus regions. As 2003 ended, Triton expected to enter additional countries in 2004 and international markets accounted for approximately 35% of unit sales. PDQ's record fourth quarter results contributed to solid year-over-year gains. Earnings increased 22% while sales increased 12%. An increase in major oil and gas station business coupled with continued strong investor demand drove the late-year surge. Market share continued to increase, although competitors were beginning to have an impact on the low-end market. A major driver in 2002 was the introduction and customer acceptance of several new products, one of which, a higher-end Laser Wash, accounted for over 30% of sales in the fourth quarter in 2003. Declining tax revenues for most states, counties and municipalities led to a slowdown in DI Foodservice's institutional foodservice equipment market, continuing a trend which began in 2002. However, both Groen and Randell were able to grow market share during 2003. There was a pickup in chain restaurant sales, as many experienced strong same-store-sales growth in the later half of 2003. Institutional markets will continue to struggle, although renovation and replacements have shown some growth in 2003 and are expected to continue into 2004. Consolidation costs experienced in 2003 to bring the Groen, Randell, and Avtec businesses under the DI Foodservice umbrella were expected to positively impact margins in 2004. Kurz-Kasch rebounded from a challenging 2002 as revenues and earnings increased in 2003 over 10% driven by the successful integration of business/product lines acquired in late 2002. In addition, Kurz Kasch purchased Wabash Magnetics, a manufacturer of actuators and sensors, in December of 2003. This acquisition positioned Kurz-Kasch to expand into the medical and irrigation markets, among others. Dovatech's performance in 2003 beneted from strength in both the Chiller and Laser businesses. A pickup in semiconductor demand drove the Laser business performance while strong sales into the medical market resulted in the Chiller business growing over 18%. Strength in Chief Automotive's computerized measuring products was more than oset by market contraction in the frame-straightening market. Somero partially oset signicant market weakness with the successful introduction of the ""Copperhead,'' a walk- behind laser screed, which accounted for over 60% of unit sales in 2003.

Resources Twelve Months Ended December 31, 2003 2002 % Change (In thousands) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $982,658 $872,898 13% EarningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 136,851 124,380 10% Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13.9% 14.2% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 990,057 867,155 14% Book-to-BillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.01 0.99 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 104,362 70,876 47% Resources' 2003 earnings increased by 10% on a sales increase of 13% due to strong increases from the Energy Products Group, De-Sta-Co Industries and the OPW companies, and the acquisition of Warn Industries. All twelve Resources companies increased bookings versus 2002 and ended the year with slightly higher backlogs overall. Warn, which was acquired on October 1, 2003, was a signicant driver of Resources' revenue and earnings growth, even after the impact of purchase accounting. Warn is a leader in the recreational winch business, both for all terrain vehicles and four-wheel drive vehicles. In addition, Warn is a leading manufacturer of all wheel drive and four-wheel drive disconnect technology Ì providing products that enhance fuel economy and improve performance of these vehicles. The continued ow of new products and the entrance into new markets should drive continued growth in the business. The Energy Products Group results include Quartzdyne, which was added to the group in 2003. Overall, the year was extremely positive with an earnings increase of 41% on a sales increase of 15% Ì great operating leverage. The core products of Alberta Oil Tool and Norris achieved sales and margin increases, both domestically and globally. Both of these units had record prots. Ferguson-Beauregard and Norriseal had

39 greatly improved earnings on relatively small increases in sales. Quartzdyne was the exception in the group. While continuing to achieve very respectable earnings, Quartzdyne did not benet from increased activity in the energy sector. However, they did not experience any loss of market share and the company continued to invest in new products to allow expansion of its served markets. OPW Fueling Components had a very strong 2003, leveraging earnings 35% on a sales increase of 8%. OPW achieved solid business growth from its ""newly certied'' products for compliance with the ""Enhanced Vapor Recovery'' requirements. In addition, the business continued to rationalize capacity in North America, while at the same time opening a new facility in China and expanding its presence in Brazil with the opening of a larger manufacturing facility. Signicant benets were achieved from global sourcing and expansion of a well-disciplined Six Sigma quality initiative. The full integration of the EMCO Electronics acquisition into the OPW Fuel Management business was completed in 2003 and drove an earnings increase in that business unit. De-Sta-Co Industries increased earnings 23% on a sales increase of 16%. Continued focus on new product development, internal lean initiatives, and improvements in channel management provided very positive results. The German and French operations achieved signicant improvement in earnings. The increased strength in the Industrial Products Group oset weakness in the electronics and U.S. automotive business segments. The pump companies, Blackmer and Wilden, experienced a number of challenges that impacted earnings in 2003, including a legal settlement and costs incurred to restructure product lines, although both companies made strides to improve their product oering and grow their business on a global basis. Wilden's non-U.S. sales grew 20% and were enhanced by the opening of a manufacturing facility in China, which exceeded rst-year plan results, and growth in their Argentina operation as that economy began to recover. Blackmer had its strongest year ever in Europe but experienced costs in the U.S. to rationalize capacity and ""right-size'' its U.S. operations. OPW Fluid Transfer Group had a year of solid improvement across all its business units with earnings increasing 16% on a sales increase of 8%. Improvements in working capital contributed to a higher return on investment. Strong results from Midland and Europe were the drivers to better results. The global footprint for this business was expanded in 2003 with the addition of a facility in Brazil and nalization of a restructuring in Europe. C. Lee Cook beneted from right-sizing in 2002, as well as from a number of management-led initiatives to reduce product cost and expand its service presence. The business achieved positive earnings leverage of 15% on a modest sales increase of 4%. As the year 2003 ended, C. Lee Cook experienced improvements across all of its business units Ì both OEM related and service related. This increase indicated continued investment in natural gas production and transmission. With demand for natural gas increasing, the Company anticipated strength in the business going forward. Texas Hydraulics experienced a challenging year as a result of continued price pressure and reduced schedules from construction equipment customers. During 2003, the business made signicant investments in new products and new customer applications/prototypes. As the year 2003 closed, orders resulting from new products were strong. The business continued to implement lean concepts and selective outsourcing to improve its cost structures. Tulsa Winch was able to grow earnings 6% on a sales increase of 9%. There was very little consistency across market segments, with dicult conditions in the large crane and service crane markets being oset by strength in the petroleum, military, and marine segments. Continued eorts to leverage strengths across the group were leading to advanced new product oerings to be introduced in 2004. RPA Process Technologies experienced an extremely dicult year in 2003 with declining revenues and a full year loss resulting from depressed capital spending in the process industry coupled with signicant one- time charges to downsize its operations in France. Hydro Systems experienced relatively at sales in its traditional core U.S. business but was still able to achieve a 4% earnings gain on a 5% sales increase, primarily as a result of prior investments in new products

40 and Europe. The European operations more than doubled earnings as a result of some very successful new product launches. Hydro also invested in the start-up of a new facility in Brazil, which began operations during the fourth quarter of 2003 and was expected to provide full year benets in 2004.

Technologies Twelve Months Ended December 31, 2003 2002 % Change (In thousands) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,231,241 $1,036,472 19% Segment earnings (losses)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 84,763 (30,339) Ì Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.9% (2.9)% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,275,598 1,046,903 22% Book-to-BillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.04 1.01 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 182,427 127,752 43% Technologies' 2003 sales increased to $1,231.2 million, a 19% increase over 2002. As a result of both the restructuring commenced in the fourth quarter of 2002 and increased revenues, earnings increased to $84.8 million, a $115.1 million improvement from a loss in 2002 of $30.3 million. Included in the loss for 2002 were restructuring, inventory and other charges totaling $35.2 million. The electronics industry is clearly in a recovery mode with even the telecom sector showing signs of increased equipment spending. As electronic manufacturing continued to shift to Asia, almost all of the Technologies companies improved their Asian infrastructure in sales and marketing and, at the equipment companies, in manufacturing. In addition, all of the companies continued their eorts to expand their product oering in the markets and applications they serve. Military, space, avionics, medical, automotive and other industrial applications played a greater role in 2003 than in 2002 in the Technologies businesses.

Circuit Board and Assembly and Test Twelve Months Ended December 31, 2003 2002 % Change (In thousands) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $731,749 $598,646 22% Segment earnings (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43,691 (55,722) Ì Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6.0% (9.3)% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 760,923 615,522 24% Book-to-Bill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.04 1.03 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 107,036 72,166 48% Technologies' CBAT businesses reported 2003 earnings of $43.7 million versus a loss of $55.7 million in 2002. The 2002 loss included inventory, restructuring and other charges of $25.9 million. Sales increased 22% to $731.8 million while bookings increased 24% to $760.9 million. Much of this growth came from the back- end semiconductor businesses, ECT and Alphasem, whose sales grew from 16% of CBAT sales in 2002 to over 22% in 2003. Universal Instruments saw a 17% increase in sales over 2002 and recorded a prot for the rst time since 2000. Universal continued to invest in new products which were exhibited at the November 2003 Productron- ica show in Germany. Universal was expected to face signicant challenges transitioning to these new products and bringing them to full commercialization in the second half of 2004. While sales at Everett Charles Technologies increased 18%, prots increased dramatically with double- digit margins, after reporting a loss in 2002. The largest increase in sales occurred in the back-end semiconductor test products. The test handling equipment at MultiTest and the load board and socket products at ECT reported the largest increase in sales and bookings activity. This trend was expected to continue into the beginning of 2004.

41 DEK experienced a 26% increase in sales and reported a prot for 2003. The weakening dollar impacted DEK's gross margin as much of its manufacturing remained in the UK, while sales were generally sold in U.S. dollars or U.S.-dollar-linked currencies. The 2002 acquisition of Acumen was integrated and provided increased levels of non-machine recurring revenues.

OK International reported a slight increase in sales of 4% which generated positive earnings compared to a loss in 2002. Earnings were slightly positive compared to a loss in prior years. During 2003, OK completely restructured its domestic operations by consolidating the majority of its manufacturing into a single plant in southern California.

Vitronics Soltec reported a 39% increase in sales and also had a prot versus a loss in 2002. Its new products in selective soldering and its ""lead free'' solder knowledge leadership helped Vitronics continue to gain market share against its competitors.

Alphasem reported a 103% increase in sales and positive earnings in 2003, in contrast to a loss in 2002. Alphasem serves the back-end semiconductor business with die bonding equipment. Under a new President, Alphasem has restructured the company's management team, its R&D eorts, Asian sales force and logistics, and established a Chinese manufacturing organization. These eorts have had a signicant impact on the improved nancial results of the Company.

Hover-Davis, acquired in October of 2002, saw sales increase 14% on a year-over-year basis. Though nancial performance improved over 2002, Hover-Davis reported a small loss in 2003, as markets served have still not fully recovered.

Specialty Electronic Components (SEC) Twelve Months Ended December 31, 2003 2002 % Change (In thousands) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $211,575 $205,635 3% Segment earnings (losses)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,316 (12,070) Ì Operating margins ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.5% (5.9)% Bookings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 221,145 199,255 11% Book-to-BillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.05 0.97 Backlog ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 53,074 42,740 24%

In Technologies' SEC companies, sales increased 3% over 2002, to $211.6 million. Earnings improved signicantly to $7.3 million when compared to a loss of $12.1 million last year. The 2002 loss included inventory, restructuring and other charges of $9.9 million. Substantially all of this earnings growth came in the fourth quarter as the rst three quarters were basically at on a year-to-year comparison. During 2003, the SEC companies made considerable eorts to expand their customer base and industries served. Telecom products were a lesser portion of the overall businesses as military, space, avionics, medical, automotive and other industrial applications grew as a percent of sales. Towards the end of 2003, even telecom customers increased their spending with indications that the trend would continue into 2004.

Vectron (formerly referred to as Quadrant), the largest of the SEC companies, reported an increase in sales of 5% for the year, but 23% for the fourth quarter alone. Margins improved to 10% in the fourth quarter. Earnings for the year improved by $17.4 million from a loss in 2002. Vectron continues to acquire new customers based on its technology, service and quality.

K&L Microwave spent most of 2003 refocusing its business on military and industrial markets. As its base station customers consolidated their supply chains, K&L found much of its planned Asian telecom infrastructure business had diminished. Accordingly, K&L has exited all Asian manufacturing, leaving in place a sales and marketing team to respond to appropriate opportunities. This realignment of its business resulted in a loss for K&L for 2003.

42 The capacitor companies, Novacap and Dielectric, both reported increased sales, 17% and 4%, respectively. Operating margins increased to 13% and 9%, respectively. Both companies continued their eorts at developing hi-reliability and hi-frequency applications for their customers. Dow-Key continued to be protable on at sales. Dow-Key serves primarily the military, space and industrial markets, which have not been as volatile as the telecom industry.

Marking and Coding Imaje, the French-based industrial marking and coding Company, reported full year sales of $287.9 million, an increase of 24%, and earnings of almost $60 million, an increase of 21%. Imaje had historically relied on its continuous ink-jet small character printer and related ink as its primary products. During 2003 and 2002, Imaje, through acquisitions, acquired ""drop on demand'' large character printer and thermal printer technologies. During 2003, products related to these new capabilities grew to 21% of equipment sales, from 17% in 2002, while at the same time, ink jet unit sales grew 17% year over year. Imaje has a strong global presence. Sales for 2003, as compared to 2002, were enhanced by a 20% strengthening of the Euro against the dollar. However, margins continued to be pressured as the majority of Imaje's product costs were incurred in Euros while signicant amounts of revenues were denominated in U.S. dollars. Consequently, Imaje was in the process of expanding its production and delivery platform in both China and North America. These eorts were expected to be accomplished by mid-2004.

Restructuring and Inventory Charges During 2002, the Company's segments and operating companies initiated a variety of restructuring programs. These restructuring programs focused on reducing the overall cost structure primarily through reductions in headcount and through the disposition or closure of certain non-strategic or redundant product lines and manufacturing facilities. Restructuring charges consist of employee separation and facility exit costs. Restructuring charges for continuing operations were recorded as selling and administrative expenses. The employee separation programs for continuing operations involved approximately 3,700 employees, all of whom had been terminated as of December 31, 2003. The Company had completed the vast majority of restructuring programs undertaken in 2002 by the end of 2003. The remaining exit reserves relate to future lease payments for facilities that were closed. These costs will be paid over the remaining term of each lease. In 2002, the Company initiated restructuring programs at selected operating companies with ongoing eorts to reduce costs in the continually challenging business environments in which the Company operates. The total restructuring charges related to these programs in 2002 were $28.7 million. The restructuring charges included both employee separation costs of $11.9 million and costs associated with exit activities of $16.8 million. The restructuring in Technologies took place in the CBAT and SEC groups, in response to the signicant declines in the end-markets served by these operations. CBAT recorded $6.6 million for employee separation and $11.2 million for exit activities. The majority of the severance and exit costs were incurred at Universal, Everett Charles and DEK. The facility exit costs consist of lease terminations and idle equipment impairments. SEC recorded $2.5 million for employee separation and $3.6 million for facility exit activities. A majority of these costs were incurred at Quadrant and Novacap. Industries recorded restructuring charges of $3.7 million, of which $2.1 million was incurred to exit an under-performing product line at Tipper Tie. The remaining $1.6 million was for employee separation and other exit costs. Diversied recorded $1.1 million of restructuring charges to rationalize its SWF business, of which $0.8 million was for severance. Due to signicant declines in the demand for certain products, special inventory reserves of $12.0 million were established in 2002, primarily in the Technologies segment and, to a lesser degree, in the Diversied segment.

Non-GAAP Disclosures In an eort to provide investors with additional information regarding the Company's results as determined by generally accepted accounting principles (GAAP), the Company also discloses non-GAAP information which management believes provides useful information to investors. Free cash ow, net debt, total capitalization, operational working capital, revenues excluding the impact of changes in foreign currency

43 exchange rates and organic sales growth are not nancial measures under GAAP and should not be considered as a substitute for cash ows from operating activities, debt or equity, sales and working capital as determined in accordance with GAAP and they may not be comparable to similarly titled measures reported by other companies. Management believes the (1) net debt to total capitalization ratio and (2) free cash ow are important measures of operating performance and liquidity. Net debt to total capitalization is helpful in evaluating the Company's capital structure and the amount of leverage it employs. Free cash ow provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions and repay debt. Reconciliations of free cash ow, total debt and net debt can be found in Item 7, Management's Discussion and Analysis. Management believes that reporting operational working capital (also sometimes called ""adjusted working capital''), which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of the Company's operational results by showing the changes caused solely by sales. In addition, management believes that reporting operational working capital and revenues at constant currency, which excludes the positive or negative impact of uctuations in foreign currency exchange rates, provides a meaningful measure of the Company's operational changes, given the global nature of Dover's businesses. Management also believes that reporting organic sales growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of the Company's revenue performance and trends between periods.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rates The Company's exposure to market risk for changes in interest rates relates primarily to the fair value of long-term xed interest rate debt, interest rate swaps attached thereto, commercial paper borrowings and investments in cash equivalents. Generally, the fair market value of xed-interest rate debt will increase as interest rates fall and decrease as interest rates rise. A 60 basis point increase or decrease in interest rates (10% of the Company's weighted average long-term debt interest rate) would have an immaterial eect on the fair value of the Company's long-term debt. Commercial paper borrowings are at variable interest rates, and have maturities of three months or less. A 14 basis point increase or decrease in the interest rates (10% of the Company's weighted average commercial paper interest rate) on commercial paper borrowings would have an immaterial impact on the Company's pre-tax earnings. All highly liquid investments, including highly liquid debt instruments purchased with an original maturity of three months or less, are considered cash equivalents. The Company places its investments in cash equivalents with high credit quality issuers and limits the amount of exposure to any one issuer. A 21 basis point decrease or increase in interest rates (10% of the Company's weighted average interest rate) would have an immaterial impact on the Company's pre-tax earnings. As of December 31, 2004, the Company had three interest rate swaps outstanding, as discussed in Note 9 to the Consolidated Financial Statements in Item 8. The Company does not enter into derivative nancial or derivative commodity instruments for trading or speculative purposes.

Foreign Exchange The Company conducts business in various foreign currencies, primarily in Canada, Europe, Brazil, China and other Asian countries. Therefore, changes in the value of the currencies of these countries aect the Company's nancial position and cash ows when translated into U.S. Dollars. The Company has generally accepted the exposure to exchange rate movements relative to its investment in foreign operations. As of December 31, 2004 the Company had not established a formal company-wide foreign-currency hedging program but may, from time to time, for a specic exposure, enter into fair value hedges. The Company has mitigated and will continue to mitigate a portion of its currency exposure through operation of decentralized foreign operating companies in which the majority of all costs are local-currency based. A change of 10% or less in the value of all foreign currencies would not have a material eect on the Company's nancial position and cash ows.

44 Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

Page Financial Statements and Supplemental Data 46 Report of Independent Registered Public Accounting Firm. 48 Consolidated Statements of Earnings (Losses) for the years ended December 31, 2004, 2003 and 2002. 50 Consolidated Balance Sheets as of December 31, 2004 and 2003. 51 Consolidated Statements of Stockholders' Equity and Comprehensive Earnings (Losses) for the years ended December 31, 2004, 2003 and 2002. 52 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002. 53-83 Notes to Consolidated Financial Statements. 84 Financial Statement Schedule Ì Schedule II, Valuation and Qualifying Accounts.

(All other schedules are not required and have been omitted)

45 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Dover Corporation:

We have completed an integrated audit of Dover Corporation's 2004 consolidated nancial statements and of its internal control over nancial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated nancial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated Financial Statements and Financial Statement Schedules

In our opinion, the consolidated nancial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the nancial position of Dover Corporation and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash ows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the nancial statement schedules listed in the index appearing under Item 15(a)(2) present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated nancial statements. These nancial statements and nancial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these nancial statements and nancial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free of material misstatement. An audit of nancial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the nancial statements, assessing the accounting principles used and signicant estimates made by management, and evaluating the overall nancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 to the consolidated nancial statements, the Company changed its method for computing depreciation in 2004.

As discussed in Note 6 to the consolidated nancial statements, in 2002 the Company ceased recording amortization of goodwill as of the beginning of the year and recorded a goodwill impairment charge of $293.0 million, net of taxes.

Internal Control Over Financial Reporting

Also, in our opinion, management's assessment, included in ""Management's Report on Internal Control Over Financial Reporting,'' appearing under Item 9A, that the Company maintained eective internal control over nancial reporting as of December 31, 2004 based on criteria established in Internal Control Ì Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, eective internal control over nancial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the COSO. The Company's management is responsible for maintaining eective internal control over nancial reporting and for its assessment of the eectiveness of internal control over nancial reporting. Our responsibility is to express opinions on management's assessment and on the eectiveness of the Company's internal control over nancial reporting based on our audit. We conducted our audit of internal control over nancial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether eective internal control over nancial reporting was maintained in all material respects. An audit of internal control over nancial reporting includes obtaining an understanding of internal control over nancial reporting, evaluating management's assessment, testing and evaluating the design and operating

46 eectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions. A company's internal control over nancial reporting is a process designed to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of nancial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over nancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material eect on the nancial statements. Because of its inherent limitations, internal control over nancial reporting may not prevent or detect misstatements. Also, projections of any evaluation of eectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As described in Management's Report on Internal Control Over Financial Reporting, management has excluded SSE GmbH, Flexbar, Rasco, Voltronics, US Synthetics, Corning Frequency Controls, Almatec, and Datamax from its assessment of internal control over nancial reporting as of December 31, 2004 because they were acquired by the Company in a purchase business combination during 2004. These companies are wholly- owned by the Company and their total revenues and assets represent less than 3% and 11% of the Company's consolidated total revenues and assets, respectively, as reected in its nancial statements for the year ended December 31, 2004.

/s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP New York, New York March 10, 2005

47 DOVER CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (LOSSES)

For the Years Ended December 31, 2004 2003 2002 (In thousands, except per share gures) Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,488,112 $4,413,296 $4,053,593 Cost of sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,593,748 2,892,874 2,722,674 Gross prot ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,894,364 1,520,422 1,330,919 Selling and administrative expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,282,162 1,076,664 996,209 Operating prot ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 612,202 443,758 334,710 Interest expense, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 61,290 62,166 64,787 All other (income) expense, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,234) 9,700 6,554 Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 60,056 71,866 71,341 Earnings from continuing operations, before taxes on income ÏÏÏÏ 552,146 371,892 263,369 Federal and other taxes on income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 143,006 86,676 55,523 Net earnings from continuing operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 409,140 285,216 207,846 Net earnings (losses) from discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏ 3,615 7,711 (36,058) Net earnings before cumulative eect of change in accounting principle ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 412,755 292,927 171,788 Cumulative eect of change in accounting principle, net of tax ÏÏ Ì Ì 293,049 Net earnings (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 412,755 $ 292,927 $ (121,261) Net earnings (losses) per common share: Basic Ì Continuing operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.01 $ 1.41 $ 1.02 Ì Discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.02 0.04 (0.18) Ì Total net earnings before cumulative eect of change in accounting principleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.03 1.45 0.85 Ì Cumulative eect of change in accounting principle ÏÏÏÏÏ Ì Ì (1.45) Ì Net earnings (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.03 $ 1.45 $ (0.60) Diluted Ì Continuing operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.00 $ 1.40 $ 1.02 Ì Discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.02 0.04 (0.18) Ì Total net earnings before cumulative eect of change in accounting principleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.02 1.44 0.84 Ì Cumulative eect of change in accounting principle ÏÏÏÏÏ Ì Ì (1.44) Ì Net earnings (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.02 $ 1.44 $ (0.60) Weighted average number of common shares outstanding during the period: Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 203,275 202,576 202,571 Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 204,786 203,614 203,346

See Notes to Consolidated Financial Statements.

48 DOVER CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS (LOSSES) Ì (continued)

The computations of basic and diluted earnings per share from continuing operations for each year were as follows: 2004 2003 2002 Numerator: Net earnings from continuing operations available to common stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $409,140 $285,216 $207,846 Denominator: Basic weighted average sharesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 203,275 202,576 202,571 Eect of dilutive securities Employee stock options ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,511 1,038 775 Denominator: Diluted weighted average shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 204,786 203,614 203,346 Basic earnings per share from continuing operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.01 $ 1.41 $ 1.02 Diluted earnings per share from continuing operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.00 $ 1.40 $ 1.02 Shares excluded from dilutive eect due to exercise price exceeding average market price of Dover's common stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,604 5,113 5,129

See Notes to Consolidated Financial Statements.

49 DOVER CORPORATION CONSOLIDATED BALANCE SHEETS

December 31, 2004 2003 (In thousands) ASSETS Current assets: Cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 357,606 $ 370,379 Receivables (less allowances of $32,757 in 2004 and $31,998 in 2003) ÏÏÏÏÏÏ 912,688 747,567 Inventories, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 775,741 639,339 Prepaid expenses and other current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 56,278 47,808 Deferred tax asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47,634 44,547 Total current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,149,947 1,849,640 Property, plant and equipment, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 756,680 717,875 Goodwill ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,149,780 1,844,701 Intangible assets, net of amortizationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 529,277 375,087 Other assets and deferred chargesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 195,674 208,069 Assets of discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,821 164,139 Total Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,792,179 $5,159,511

LIABILITIES Current liabilities: Notes payable and current maturities of long-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 339,264 $ 63,669 Accounts payable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 364,406 283,814 Accrued compensation and employee benets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 181,675 151,414 Accrued insurance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 88,070 69,509 Other accrued expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 201,668 200,964 Federal and other taxes on income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 180,893 141,431 Total current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,355,976 910,801 Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 753,063 1,003,915 Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 296,464 233,906 Other deferrals (principally compensation)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 246,170 194,332 Liabilities of discontinued operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21,824 73,886 Commitments and contingent liabilities Stockholders' equity Capital Stock: Preferred ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Common ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 239,015 238,304 Additional paid-in capitalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 98,979 80,746 Accumulated other comprehensive earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 195,220 119,673 Retained earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,628,715 3,342,020 4,161,929 3,780,743 Less common stock in treasury ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,043,247 1,038,072 Net stockholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,118,682 2,742,671 Total Liabilities and Stockholders' Equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,792,179 $5,159,511

See Notes to Consolidated Financial Statements.

50 DOVER CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE EARNINGS (LOSSES) Accumulated Common Other Stock Additional Comprehensive Total Comprehensive $1 Par Paid-In Earnings Retained Treasury Stockholders' Earnings Value Capital (Loss) Earnings Stock Equity (Loss) (In thousands, except per share gures) Balance as of December 31, 2001ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $237,303 $55,223 $(149,663) $3,395,293 $(1,018,815) $2,519,341 Net earnings (losses) ÏÏÏÏÏÏÏÏÏ Ì Ì Ì (121,261) Ì (121,261) $(121,261) Dividends paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (109,436) Ì (109,436) Ì Common stock issued for options exercised ÏÏÏÏÏÏÏÏÏÏÏ 381 8,630 Ì Ì Ì 9,011 Ì Stock issued, net of cancellations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4) 1,640 Ì Ì Ì 1,636 Ì Stock acquired during the year Ì Ì Ì Ì (15,511) (15,511) Ì Increase from translation of foreign nancial statements ÏÏ Ì Ì 111,438 Ì Ì 111,438 111,438 Unrealized holding gains (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (384) Ì Ì (384) (384) Balance as of December 31, 2002ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $237,680 $65,493 $ (38,609) $3,164,596 $(1,034,326) $2,394,834 $ (10,207) Net earnings (losses) ÏÏÏÏÏÏÏÏÏ Ì Ì Ì 292,927 Ì 292,927 $ 292,927 Dividends paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (115,503) Ì (115,503) Ì Common stock issued for options exercised ÏÏÏÏÏÏÏÏÏÏÏ 607 13,758 Ì Ì Ì 14,365 Ì Stock issued, net of cancellations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17 1,495 Ì Ì Ì 1,512 Ì Stock acquired during the year Ì Ì Ì Ì (3,746) (3,746) Ì Increase from translation of foreign nancial statements ÏÏ Ì Ì 157,885 Ì Ì 157,885 157,885 Unrealized holding gains (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 397 Ì Ì 397 397 Balance as of December 31, 2003ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $238,304 $80,746 $ 119,673 $3,342,020 $(1,038,072) $2,742,671 $ 451,209 Net earningsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 412,755 Ì 412,755 $ 412,755 Dividends paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì (126,060) Ì (126,060) Ì Common stock issued for options exercised ÏÏÏÏÏÏÏÏÏÏÏ 698 17,868 Ì Ì Ì 18,566 Ì Stock issued, net of cancellations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13 365 Ì Ì Ì 378 Ì Stock acquired during the period Ì Ì Ì Ì (5,175) (5,175) Ì Increase from translation of foreign nancial statements ÏÏ Ì Ì 76,081 Ì Ì 76,081 76,081 Unrealized holding gains (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (534) Ì Ì (534) (534) Balance as of December 31, 2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $239,015 $98,979 $ 195,220 $3,628,715 $(1,043,247) $3,118,682 $ 488,302

Preferred Stock, $100 par value per share. 100,000 shares authorized; none issued. Common Stock, $1 par value per share. 500,000,000 shares authorized; issued 239,015,326 in 2004, and 238,304,232 shares in 2003. Treasury Stock; 35,518,671 shares in 2004, and 35,391,575 shares in 2003, at cost. Dividends paid per share were $.62 and $.57 and $.54 for 2004, 2003, and 2002, respectively. Unrealized holding gains (losses), net of taxes of ($288), $214 and ($207) in 2004, 2003 and 2002, respectively. U.S. Federal tax benefit recorded in paid in capital of $4,959 in 2004, $3,513 in 2003 and $2,597 in 2002 on stock options exercised. See Notes to Consolidated Financial Statements.

51 DOVER CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2004 2003 2002 (In thousands) Cash ow from operating activities: Net earnings (losses) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 412,755 $ 292,927 $(121,261) Adjustments to reconcile net earnings to net cash from operating activities: Net (earnings) losses from discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏ (3,615) (7,711) 36,058 Cumulative eect of change in accounting principle, net of taxes Ì Ì 293,049 Depreciation and amortizationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 160,845 151,309 156,946 Provision for losses on accounts receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,869 8,705 12,057 Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,885 47,701 21,062 Increase (decrease) in deferred compensation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39,535 8,371 4,399 Other, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (15,261) 20,428 10,042 Changes in assets and liabilities (excluding eects of acquisitions, dispositions and foreign exchange): Decrease (increase) in accounts receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (92,435) (25,060) 30,054 Decrease (increase) in inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (59,472) 4,789 73,129 Decrease (increase) in prepaid expenses & other assets ÏÏÏÏÏÏ 9,189 762 (11,860) Increase (decrease) in accounts payable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47,643 32,257 (21,003) Increase (decrease) in accrued expenses and other non-current liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17,728 22,897 12,974 Increase (decrease) in accrued federal and other taxes payable 67,781 68,471 (55,807) Contributions to dened benet pension plan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (48,480) (44,000) Total adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 184,692 284,439 517,100 Net cash from operating activities of continuing operations ÏÏ 597,447 577,366 395,839 Cash ows (used in) investing activities: Proceeds from sale of property and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,768 9,862 16,676 Additions to property, plant and equipmentÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (107,434) (96,400) (96,417) Proceeds from sale of discontinued businesses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 73,921 13,362 16,817 Acquisitions (net of cash and cash equivalents acquired) ÏÏÏÏÏÏÏÏÏ (506,108) (362,062) (99,710) Net cash (used in) investing activities of continuing operations (524,853) (435,238) (162,634) Cash ows from (used in) nancing activities: Increase (decrease) in notes payable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25,089 38,533 (19,528) Reduction of long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (9,025) (26,384) (3,989) Proceeds from long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 614 1,375 1,979 Purchase of treasury stock ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (5,176) (3,746) (15,510) Proceeds from exercise of stock optionsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,608 7,445 6,414 Cash dividend to stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (126,060) (115,504) (109,436) Net cash (used in) nancing activities of continuing operations (100,950) (98,281) (140,070) Eect of exchange rate changes on cash and cash equivalents ÏÏÏÏÏ 12,155 33,674 23,521 Cash from (used in) discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,428 (966) 5,208 Net (decrease) increase in cash and cash equivalentsÏÏÏÏÏÏÏÏÏÏ (12,773) 76,555 121,864 Cash and cash equivalents at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 370,379 293,824 171,960 Cash and cash equivalents at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 357,606 $ 370,379 $ 293,824 Supplemental information Ì cash paid during the year for: Income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 107,378 $ 100,904 $ 89,318 Interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 67,963 68,546 67,554

See Notes to Consolidated Financial Statements.

52 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of Business and Summary of Signicant Accounting Policies

The Company is a multinational, diversied manufacturing corporation comprised of 49 stand-alone operating companies which manufacture a broad range of specialized industrial products and sophisticated manufacturing equipment. The Company also provides some engineering and testing services, which are not signicant in relation to consolidated revenues. The Company's operating companies are based primarily in the United States of America and Europe. Until December 31, 2004, the Company's businesses were divided into four segments. Beginning with the rst quarter 2005 earnings announcement, the Company will report its results in six segments and discuss its operating companies in 13 groups. Management believes this new operating structure will enhance the Company's market focus, acquisition capacity and executive leadership. The four segments into which the Company's businesses were divided until December 31, 2004, were: Diversied, Industries, Resources, and Technologies. Diversied builds packaging and printing machinery, heat transfer equipment, food refrigeration and display cases, specialized bearings, construction and agricultural cabs, as well as sophisticated products for use in the defense, aerospace and automotive industries. Industries makes products for use in the waste handling, bulk transport, automotive service, commercial food service and packaging, welding, cash dispenser and construction industries. Resources manufactures products primarily for the automotive, uid handling, petroleum, original equipment manufacturer (OEM) engineered components and chemical equipment industries. Technologies builds sophisticated automated assembly and testing equipment and specialized electronic components for the electronics industry, and industrial printers for coding and marking. The accounting policies that aect the more signicant elements of the Company's nancial statements and that apply to the Company's segment information are described briey below.

Consolidation

The consolidated nancial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The results of operations of purchased businesses are included from the dates of acquisitions. Several businesses qualied for discontinued operations treatment in 2004, 2003, and 2002. The assets, liabilities, results of operations and cash ows of all discontinued operations have been segregated and reported as discontinued operations for all periods presented. The Company has evaluated the requirements of Financial Accounting Standards Board Interpretation No. 46 (""FIN 46''), ""Consolidation of Variable Interest Entities,'' and has not identied any variable purpose entities that would require consolidation.

Use of Estimates

The preparation of nancial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that aect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the nancial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could dier from those estimates. Signicant estimates include revenue recognition, allowances for doubtful accounts receivable, net realizable value of inventories, restructuring charges, valuation of goodwill, pension and post retirement assumptions, useful lives associated with amortization and depreciation of intangibles and xed assets, warranty reserves, income taxes and tax valuation reserves, environmental reserves, legal reserves, insurance reserves and the valuations of discontinued assets and liabilities.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, demand deposits and short-term investments which are highly liquid in nature and have original maturities at the time of purchase of three months or less. Cash equivalents were $357.6 million and $370.4 million at December 31, 2004 and 2003, respectively.

53 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable is composed primarily of trade accounts receivable that arise primarily from the sale of goods or services on account and are stated at historical cost. Management evaluates accounts receivable at each operating company to estimate the amount of accounts receivable that will not be collected in the future and records the provision. The provision for doubtful accounts is recorded as a charge to operating expense, while the credit is recorded in the allowance for doubtful accounts, which reduces accounts receivable. The estimated allowance for doubtful accounts is based primarily on management's evaluation of the aging of the accounts receivable balance, the nancial condition of its customers, historical trends, and time outstanding of specic balances. Actual collections of accounts receivable could dier from management's estimates due to changes in future economic, industry or customer nancial conditions. Receivables consist of the following at December 31, 2004 and 2003. 2004 2003 (in thousands) Trade Accounts Receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 919,793 757,975 Trade Notes Receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,282 4,004 Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19,370 17,586 Total ReceivablesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 945,445 779,565

Following are the changes in the allowance for doubtful accounts during the years ended December 31, 2004, 2003, and 2002. Balance at Acq. By Charged to Balance at Beginning of Purchase Cost and Accounts Credit to Close of Year or Merger Expense Written O Income Year (in thousands) Year Ended December 31, 2004 Allowance for Doubtful Accounts ÏÏÏ $31,998 $2,679 $ 7,869 $ (6,064) $(3,725) $32,757 Year Ended December 31, 2003 Allowance for Doubtful Accounts ÏÏÏ $30,174 $1,047 $ 8,705 $ (6,719) $(1,209) $31,998 Year Ended December 31, 2002 Allowance for Doubtful Accounts ÏÏÏ $33,652 $ 123 $12,057 $(10,838) $(4,820) $30,174

Inventories Inventory for the majority of the Company's subsidiaries, including all international subsidiaries and the Technologies segment, are stated at the lower of cost, determined on the rst-in, rst-out (FIFO) basis, or market. Other domestic inventory is stated at cost, determined on the last-in, rst-out (LIFO) basis, which is less than market value.

Property, Plant and Equipment and Depreciation Property, plant and equipment includes the cost of land, buildings, equipment and signicant improvements to existing plant and equipment. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When property or equipment is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and the gain or loss realized on disposition is reected in earnings. Depreciation expense was $131.4 million in 2004, $133.1 million in 2003, and $139.1 million in 2002. Plant and equipment was generally depreciated through December 31, 2003 based upon accelerated methods, utilizing estimated useful property lives. Building and lease hold improvement lives ranged from 5 to 50 years; machinery and equipment lives range from 2 to 20 years. The Company changed to the straight-line method of depreciation for assets acquired on or after January 1, 2004, from various

54 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) accelerated depreciation methods. Management's decision to change was based on the fact that straight-line depreciation has become a better method of matching revenue and expenses over the estimated useful life of capitalized assets given their characteristics and usage patterns. The Company has determined that the design and durability of these assets increasingly does not diminish to any signicant degree over time and it is therefore preferable to recognize the related cost uniformly over their estimated useful lives. The eect of the change for the twelve months ended December 31, 2004, was an increase to net income of approximately $8.2 million net of tax or $.04 per diluted share.

Derivatives Transactions Derivatives contracts are instruments such as futures, forwards, swaps or options contracts, which derive their value from underlying assets, indices, reference rates or a combination of these factors. Derivative instruments may be privately negotiated contracts, which are often referred to as OTC derivatives, or they may be listed and traded on an exchange. In April 2003, the FASB issued SFAS No. 149, ""Amendment of Statement 133 on Derivative Instruments and Hedging Activities.'' SFAS 149 amends and claries nancial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, ""Accounting for Derivative Instruments and Hedging Activities.'' SFAS 149 is generally eective for contracts entered into or modied after June 30, 2003, and for hedging relationships designated after June 30, 2003. The adoption of SFAS 149 did not have a material impact on the Company's nancial statements. The company periodically enters into fair value hedge transactions specically to hedge its exposures to various items including but not limited to interest rate and foreign exchange rate risk. Tests for hedge ineectiveness are conducted periodically and any ineectiveness found is recognized in the income statement. The company does not enter into derivatives transactions that would be classied as speculative as dened by SFAS No. 149 and No. 133. The fair market value of all outstanding transactions is recorded in the Other Assets and Deferred Charges section of the balance sheet. The corresponding change in value of the hedged assets/liabilities is recorded directly in that section of the balance sheet.

Goodwill and Other Intangible Assets As of January 1, 2002, the Company follows Statement of Financial Accounting Standards (""SFAS'') No. 142, ""Goodwill and Other Intangible Assets.'' In accordance with the guidelines of this accounting principle, goodwill and indenite-lived intangible assets are no longer amortized and are assessed for impairment on at least an annual basis. Refer to Note 6 for disclosure on the impact of the adoption. The Company has elected to test annually for goodwill impairment in the fourth quarter of the scal year. Goodwill of a reporting unit will also be tested for impairment between annual tests if a triggering event occurs, as dened by SFAS No. 142, that could potentially reduce the fair value of the reporting unit below its carrying value.

Long-Lived Assets In accordance with SFAS No. 144, ""Accounting for the Impairment or Disposal of Long-Lived Assets,'' long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If an indicator of impairment exists for any grouping of assets, an estimate of undiscounted future cash ows is produced and compared to its carrying value. If an asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of discounted future cash ows.

55 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

Comprehensive Earnings (Losses)

Comprehensive earnings (losses) includes net earnings (losses), foreign currency translation, unrecognized gains (losses) on cash ow hedges and both realized and unrealized holding gains (losses) on marketable securities.

Foreign Currency

Assets and liabilities of foreign subsidiaries, where the local currency is the functional currency, have been translated at year-end exchange rates and prot and loss accounts have been translated using weighted average yearly exchange rates. Adjustments resulting from translation have been recorded in the equity section of the balance sheet as cumulative translation adjustments. Assets and liabilities of an entity that are denominated in currencies other than an entity's functional currency are remeasured into the functional currency using end of period exchange rates. Gains and losses related to these remeasurements are recorded within the Statement of Earnings (Losses) as a component of ""All other (income) expense, net.'' Other comprehensive earnings (losses) were increased by $76.1 million, $157.9 million, and $111.4 million in 2004, 2003 and 2002, respectively, as a result of the foreign currency translation adjustments.

Revenue Recognition

Revenue on sales of product is recognized and earned when all of the following circumstances are satised: a) persuasive evidence of an arrangement exists; b) price is xed or determinable; c) collectibility is reasonably assured; and, d) delivery has occurred. In revenue transactions where installation is required, revenue can be recognized when the installation obligation is not essential to the functionality of the delivered products. Revenue transactions involving non-essential installation obligations are those which can generally be completed in a short period of time, at insignicant cost, and the skills required to complete these installations are not unique to the Company and, in many cases, can be provided by third parties or the customers. If the installation obligation is essential to the functionality of the delivered product, revenues are deferred until installation is complete. In a limited number of revenue transactions, other post-shipment obligations such as training and customer acceptance are required and, accordingly, revenues are deferred until the customer is obligated to pay, or acceptance has been conrmed. Service revenues are recognized and earned when services are performed and are not signicant to any period presented.

Stock-Based Compensation

SFAS No. 123 ""Accounting for Stock-Based Compensation as amended by SFAS No. 148,'' allows companies to measure compensation cost in connection with employee share option plans using a fair value based method or to continue to use an intrinsic value based method as dened by APB No. 25 ""Accounting for Stock Issued to Employees,'' which generally does not result in a compensation cost at time of grant. The Company accounts for stock-based compensation under APB 25, and does not recognize stock-based compensation expense upon the grant of its stock options because the option terms are xed and the exercise price equals the market price of the underlying stock on the grant date. However, in accordance with SFAS No. 123R, ""Share-Based Payment,'' the Company will begin to recognize compensation expense for stock-based awards to employees in the third quarter of 2005.

56 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

The following table illustrates the eect on net earnings and basic diluted earnings per share if the Company had recognized compensation expense upon grant of the options, based on the Black-Scholes option pricing model: For the Years Ended December 31, 2004 2003 2002 (In thousands, except per share gures) Net earnings from continuing operations, as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $409,140 $285,216 $207,846 Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax eects 18,206 17,818 15,447 Pro forma net earnings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $390,934 $267,398 $192,399 Basic earnings per share from continuing operations: As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.01 $ 1.40 $ 1.03 Pro formaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.92 1.32 0.95 Diluted earnings per share from continuing operations: As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.00 $ 1.40 $ 1.02 Pro formaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.91 1.31 0.95

The fair value of each option grant was estimated on the date of grant using a Black-Scholes option- pricing model with the following assumptions: For the Years Ended December 31, 2004 2003 2002 Risk-free interest rates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.71% 3.87% 5.32% Dividend yield ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.46% 1.40% 1.27% Expected life ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8 8 9 Volatility ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31.54% 30.64% 28.10% Weighted average option grant price ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $41.25 $24.58 $37.92 Weighted average fair value of options grantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $14.89 $ 8.90 $15.29

Income Taxes

The provision for income taxes on continuing operations includes federal, state, local and foreign taxes. Tax credits, primarily for research and experimentation and foreign earnings and export programs are recognized as a reduction of the provision for income taxes on continuing operations in the year in which they are available for tax purposes. Deferred taxes are provided on temporary dierences between assets and liabilities for nancial reporting and tax purposes as measured by enacted tax rates expected to apply when temporary dierences are settled or realized. Future tax benets are recognized to the extent that realization of those benets is considered to be more likely than not. A valuation allowance is established for deferred tax assets for which realization is not assured. The Company has not provided for any residual U.S. income taxes on unremitted earnings of foreign subsidiaries as such earnings are currently intended to be indenitely reinvested. On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the ""Act''). The Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85 percent dividends received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations and, as of today, uncertainty remains as to how to interpret numerous provisions in the Act. Therefore, the Company is not yet in a position to decide whether, and to what extent, it might repatriate foreign earnings that have not yet been remitted to the U.S. Based on

57 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) the Company's analysis to date, however, it is reasonably possible that the Company may repatriate some amount between zero and $176.0 million, with the respective tax liability ranging from zero to $7.8 million. The Company expects to be in a position to nalize its assessment by the third quarter of 2005.

Research and Development Costs

Research and development expenditures, including qualifying engineering costs, are expensed when incurred and amounted to $188.3 million in 2004, $158.7 million in 2003 and $166.2 million in 2002.

Risk Retention, Insurance

The Company's property and casualty insurance programs contain various deductibles that, based on our experience, are typical and customary for a company of our size. We do not consider any of the deductibles to represent a material risk for the Company. The Company generally maintains deductibles for claims and liabilities related primarily to workers' compensation, health and welfare claims, commercial, general, product and automobile liability, and property damage and business interruption resulting from certain events. The Company accrues for claim exposures that are probable of occurrence and can be reasonably estimated. As part of the Company's risk management program, insurance is maintained to transfer risk beyond the level of self-retention and provides stop loss protection on both an individual claim and annual aggregate basis. The Company self-insures its product and general liability claims up to $3.0 million per occurrence, its workers' compensation claims up to $5.0 million per occurrence and automobile liability claims up to $1.0 million per occurrence. As of January 1, 2005, the Company increased its self-insurance level for its products and general liability claims up to $5.0 million per occurrence. Third-party insurance provides coverage in excess of these amounts. In addition, the Company has aggregate deductible stop loss insurance from third-party insurers on both an aggregate and an individual occurrence basis well in excess of the limits discussed above. A worldwide program of property insurance covers the Company's owned property and any business interruptions that may occur due to an insured hazard aecting those properties, subject to reasonable deductibles and aggregate limits.

Accounting for Derivative Financial Instruments

The Company follows SFAS Statement No. 133, ""Accounting for Derivative Instruments and Hedging Activities'' and its related amendment SFAS Statement No. 138, ""Accounting for Certain Derivative Instruments and Certain Hedging Activities.'' These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The statements require recognition of all derivatives as either assets or liabilities on the balance sheet and the measurement of those instruments at fair value. If the derivative is designated as a fair value hedge and is eective, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings in the same period. If the derivative is designated as a cash ow hedge, the eective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item aects earnings. Ineective portions of changes in the fair value of cash ow hedges are recognized in earnings. The Company does not enter into derivative nancial instruments for speculative purposes and does not have a material portfolio of derivative nancial instruments.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, trade receivables, accounts payable, notes-payable and accrued expenses approximates fair value due to the short maturity of these instruments.

58 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

New Accounting Standards In July 2002, the FASB issued SFAS No. 146, ""Accounting for Costs Associated with Exit or Disposal Activities,'' which is eective for exit and disposal activities initiated after December 31, 2002. The standard replaces EITF Issue 94-3 and requires companies to recognize costs associated with exit or disposal activities when they are incurred, as dened in SFAS No. 146, rather than at the date of a commitment to an exit or disposal plan. The provisions of SFAS 146 are to be applied prospectively. The eect of the adoption of SFAS No. 146 was immaterial to the Company's consolidated results of operations and nancial position. In November of 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), ""Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34.'' FIN 45 claries the requirements of FASB Statement No. 5, ""Accounting for Contingencies,'' relating to the guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure requirements of FIN 45 are eective for nancial statements of interim or annual periods that end after December 15, 2002, and have been incorporated into the footnotes. The provisions for initial recognition and measurement are eective on a prospective basis for guarantees that are issued or modied after December 31, 2002, irrespective of the guarantor's year-end. FIN 45 requires that upon issuance of a guarantee, the entity must recognize a liability for the fair value of the obligation it assumes under that guarantee. The eect of the adoption of FIN 45 was immaterial to the Company's consolidated results of operations and nancial position. The Company has also adopted the disclosure requirements of FIN 45. In December of 2002, the FASB issued SFAS No. 148, ""Accounting for Stock-Based Compensation- Transition and Disclosure Ì an amendment of SFAS 123,'' which is eective for scal years ending after December 15, 2002, regarding certain disclosure requirements that have been incorporated into the footnotes. This Statement amends FASB Statement No. 123, ""Accounting for Stock-Based Compensation,'' to provide alternative methods of transition for an entity that voluntarily changes to the fair-value-based method of accounting for stock-based employee compensation. It also amends the disclosure provisions of that Statement to require prominent disclosure about the eects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation. Finally, this Statement amends APB Opinion No. 28, ""Interim Financial Reporting,'' to require disclosure about those eects in interim nancial information. The eect of the adoption of SFAS No. 148 had no impact on the Company's consolidated results of operations or nancial position. In January 2003, FASB Interpretation No. 46 (FIN 46), ""Consolidation of Variable Interest Entities,'' was issued. FIN 46 provides guidance on consolidating variable interest entities and applies immediately to variable interests created after January 31, 2003. In December 2003, the FASB revised and superseded FIN 46 with the issuance of FIN 46R in order to address certain implementation issues that were adopted the rst reporting period ending after March 15, 2004. The interpretation requires variable interest entities to be consolidated if the equity investment at risk is not sucient to permit an entity to nance its activities without support from other parties or the equity investors lack certain specied characteristics. The eect of the adoption of FIN 46 was immaterial to the Company's consolidated results of operations and nancial position. In May 2003, the FASB issued SFAS No. 150, ""Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.'' SFAS No. 150 establishes standards for how an issuer classies and measures certain nancial instruments with characteristics of both liabilities and equity. SFAS No. 150 applies specically to a number of nancial instruments that companies have historically presented within their nancial statements either as equity or between the liabilities section and the equity section, rather than as liabilities. SFAS No. 150 is eective for nancial instruments entered into or modied after May 31, 2003, and otherwise was eective at the beginning of the rst interim period beginning after June 15, 2003. The eect of the adoption of SFAS No. 150 was immaterial to the Company's consolidated results of operations and nancial position.

59 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

In December 2003, the FASB published a revision to SFAS No. 132 ""Employers' Disclosure about Pensions and Other Postretirement Benets, an amendment of FASB Statements No. 87, 88, and 106.'' SFAS No. 132R requires additional disclosures to those in the original SFAS No. 132 about the assets, obligations, cash ows, and net periodic benet cost of dened benet pension plans and other dened benet postretirement plans. SFAS No. 132R is eective for nancial statements with scal years ending after December 15, 2003. The adoption of SFAS No. 132R did not have a material impact on the Company's consolidated results of operations or nancial position.

In May 2004, the FASB issued FASB Sta Position No. FAS 106-2 (FSP 106-2), ""Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,'' which supersedes FSP 106-1. FSP 106-2 provides guidance on the accounting for the eects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the ""Act'') for employers that sponsor postretirement health care plans that provide prescription drug benets. It also requires certain disclosures regarding the eect of the federal subsidy provided by the Act. This FSP was eective for the rst interim or annual period beginning after June 15, 2004. The eect of adoption has not been material to the Company's results of operations, cash ow or nancial position.

In November of 2004, the FASB issued SFAS No. 151, ""Inventory Costs,'' an amendment of ARB No. 43, Chapter 4 ""Inventory Pricing.'' SFAS No. 151 adopts the IASB view related to inventories that abnormal amounts of idle capacity and spoilage costs should be excluded from the cost of inventory and expensed when incurred. The provisions of SFAS No. 151 are applicable to inventory costs incurred during scal years beginning after June 15, 2005. The eect of the adoption of SFAS No. 151 will be immaterial to the Company's consolidated results of operations and nancial position.

In December of 2004, the FASB issued SFAS No. 123R, ""Share-Based Payment.'' SFAS No. 123R revises previously issued SFAS 123 ""Accounting for Stock-Based Compensation,'' supersedes Accounting Principles Board (APB) Opinion No. 25 ""Accounting for Stock Issued to Employees'', and amends SFAS Statement No. 95 ""Statement of Cash Flows.'' SFAS No. 123R requires the Company to expense the fair value of employee stock options and other forms of stock-based compensation for the interim or annual periods beginning after June 15, 2005. The share-based award must be classied as equity or as a liability and the compensation cost is measured based on the fair value of the award at the date of the grant. In addition liability awards will be re-measured at fair value each reporting period. The eect of the adoption of SFAS No. 123R will not be materially dierent from the pro-forma results included in Note 1 Stock-Based Compensation.

Reclassications

Certain amounts in prior years have been reclassied to conform to the current year's presentation.

2. Acquisitions

All acquisitions which are listed below for the years ending 2004 and 2003, have been accounted for by the purchase method of accounting. Accordingly, the accounts of the acquired companies, after adjustment to reect fair market values assigned to assets and liabilities, have been included in the consolidated nancial statements from their respective dates of acquisitions.

60 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

2004 Acquisitions Acquired Date Type Companies Location (Near) Segment Operating Company 13-Apr ÏÏÏÏÏÏÏÏÏÏ Stock SSE GmbH Singen, Germany Technologies Alphasem Manufactures and distributes production equipment for the semiconductor, Telecom/Optoelectronics and Flat Panel Display markets. 30-Apr ÏÏÏÏÏÏÏÏÏÏ Stock Flexbar Texas, United States Resources Energy Products Group Designs and manufactures Sinkerbars for use in the extraction of oil and gas. 17-MayÏÏÏÏÏÏÏÏÏÏ Stock Rasco Kolbermoor, Germany Technologies Everett Charles Group Manufactures test gravity feeders and related products for use in semiconductor tests. 24-MayÏÏÏÏÏÏÏÏÏÏ Asset Voltronics New Jersey, United States Technologies Dielectric Manufactures variable capacitors. 31-Aug ÏÏÏÏÏÏÏÏÏÏ Stock US Synthetics Utah, United States Resources Energy Products Group Supplier of polycrystalline diamond cutters used in drill bits for oil and gas exploration. 1-Sep ÏÏÏÏÏÏÏÏÏÏÏ Stock Corning Frequency Controls Pennsylvania, United States Technologies Vectron Manufactures quartz crystals, oscillators and lters for the communications, test & instrumentation, position location, automotive and military/aerospace electronic markets. 17-Dec ÏÏÏÏÏÏÏÏÏÏ Stock Almatec Kamp-lintfort, Germany Resources Wilden Manufactures air operated double diaphragm pumps. 23-Dec ÏÏÏÏÏÏÏÏÏÏ Stock Datamax Florida, United States Technologies Imaje Manufactures Bar Code printers and related products. The aggregate cost of the 2004 acquisitions was approximately $517.5 million. The amount assigned to goodwill and major intangible asset classications by segment is as follows: Total Technologies Resources (In thousands) Goodwill Ì Tax deductibleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 15,377 $ 15,377 $ Ì Goodwill Ì Non-tax deductible ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 263,276 130,519 132,757 Trademarks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,158 6,558 3,600 Customer intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 86,469 47,469 39,000 Unpatented technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 55,498 45,798 9,700 Other intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6,011 5,551 460 Note that these intangible amounts are subject to change pending nal valuation and purchase price allocation.

61 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

2003 Acquisitions Acquired Date Type Companies Location (Near) Segment Operating Company 20-Mar ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Asset Standard Aerospace Montreal, Canada Diversied Sargent Manufactures aircraft engine rotating parts and airframe structural components. 27-May ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Stock/Asset Blitz GmbH Braunlingen, Germany Industries Rotary Lift Manufactures heavy duty inground lifts, vehicle component removal devices, air compressors, and tire lling products. 1-Aug ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Asset Temex, S.A.W. Neuchatel, Switzerland Technologies Vectron Manufactures high frequency surface acoustical wave lters. 1-Oct ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Stock Warn Industries Oregon, United States Resources Stand-Alone Manufactures high performance winches for use on light trucks, recreational vehicles and all terrain vehicles (ATVs). Additionally, company manufactures hub locks and patented four-wheel and all-wheel drive powertrain systems. 2-DecÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Stock Wabash Indiana, United States Industries Kurz-Kasch Manufactures actuators and sensors for industrial markets. 12-DecÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Stock Curt May SA Buenos Aires, Argentina Technologies Imaje Distributor of Imaje Marking and Coding products in Argentina.

The aggregate cost of the 2003 acquisitions was approximately $367.5 million of which $184.9 million represents goodwill. The following unaudited pro forma information presents the results of operations of the Company as if the 2004 and 2003 acquisitions had taken place on January 1, 2004 and January 1, 2003, respectively. Twelve Months Ended December 31, 2004 2003 (In thousands, except per share gures) Net sales from continuing operations: As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,488,112 $4,413,296 Pro forma ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,735,028 5,700,869 Net earnings from continuing operations: As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 409,140 $ 285,216 Pro forma ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 434,918 314,042 Basic earnings per share from continuing operations: As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.01 $ 1.41 Pro forma ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.14 1.55 Diluted earnings per share from continuing operations: As reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2.00 $ 1.40 Pro forma ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.12 1.54 These pro forma results of operations have been prepared for comparative purposes only and include certain adjustments, such as additional amortization and depreciation expense as a result of intangibles and xed assets acquired. They do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the date indicated, or that may result in the future. On October 1, 2003, Dover acquired Warn Industries, Inc. for approximately $326.0 million in cash. Warn, located in Portland, Oregon, is the industry leader in the design, manufacture and marketing of high- performance vehicular winches. Warn, with annual sales in excess of $150 million, is a stand-alone operating company within the Resources segment. The acquisition was originally nanced with existing cash on hand and commercial paper borrowings. During the fourth quarter of 2003, all the commercial paper borrowings

62 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) associated with the acquisition were repaid. The results of Warn's operations have been included in the consolidated nancial statements since the date of acquisition. The Company has obtained a valuation for certain tangible and intangible assets related to the acquisition. Approximately $91.5 million of the goodwill is deductible for tax purposes. The following table is a summary of the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition: As of October 31, 2003 (In thousands) Current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 46,714 Property, plant & equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39,377 Intangible assets: Indenite-lived trademarks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 65,400 Customer intangibles ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 42,900 Distributor relationships ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39,500 Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 815 $148,615 GoodwillÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 179,794 Total assets acquiredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $414,500 Total liabilities assumedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 88,484 Net assets acquiredÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $326,016

3. Inventories Summary by Components at December 31, 2004 2003 (In thousands) Raw materialsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $366,977 $288,858 Work in process ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 207,885 169,134 Finished goods ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 242,825 210,989 Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 817,687 668,981 Less LIFO reserve ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 41,946 29,642 $775,741 $639,339

At December 31, 2004 and 2003, domestic inventories determined by the LIFO inventory method amounted to $138.7 million and $123.7, respectively.

63 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

4. Property, Plant and Equipment Summary by Components at December 31, 2004 2003 (In thousands) Land ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 61,744 $ 53,705 Buildings ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 500,350 463,603 Machinery and equipment ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,524,119 1,393,098 Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,086,213 1,910,406 Accumulated depreciationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,329,533 1,192,531 $ 756,680 $ 717,875

5. Other Accrued Expenses Summary by Components at December 31, 2004 2003 (In thousands) Warranty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 41,102 $ 31,693 Taxes other than incomeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,351 26,201 Unearned revenue ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,022 24,302 Customer deposits, advances and rebates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25,015 23,520 Accrued interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,597 16,291 Legal and environmentalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,720 12,377 Restructuring and exit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,071 3,687 Other, individually less than 5% of total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 70,790 62,893 $201,668 $200,964

6. Goodwill and other Intangible Assets As of January 1, 2002, the Company adopted SFAS No. 142, ""Goodwill and Other Intangible Assets.'' In accordance with the guidelines of this accounting principle, goodwill and indenite-lived intangible assets are no longer amortized but will be assessed for impairment on at least an annual basis. As an initial step in the implementation process, the Company identied 41 reporting units that would be tested for impairment. In the Industries, Diversied, and Resources market segments the ""stand-alone'' operating companies were identied as ""reporting units.'' These entities qualify as reporting units in that they are one level below an operating segment, discrete nancial information exists for each entity and the segment executive management group directly reviews these units. In the Technologies segment, three reporting groups were identied, Marking (consisting of one stand-alone operating company), Circuit Board Assembly and Test or ""CBAT'' and Specialty Electronic Components or ""SEC.'' As required under the transitional accounting provisions of SFAS No. 142, the Company completed both steps required to identify and measure goodwill impairment at each of the reporting units as of January 1, 2002. The rst step involved identifying all reporting units with carrying values (including goodwill) in excess of fair value, which was estimated using the present value of future cash ows. The identied reporting units from the rst step were then measured for impairment by comparing the implied fair value of the reporting unit goodwill, determined in the same manner as in a business combination, with the carrying amount of the goodwill. As a result of these procedures, goodwill was reduced by $345.1 million and a net after tax charge of $293.0 million was recognized as a cumulative eect of a change in accounting principle in the rst quarter of 2002. Five stand-alone operating companies or reporting units accounted for over 90% of the total impairment Ì Triton and Somero from the Industries segment, Crenlo and Mark Andy from the Diversied

64 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) segment, and Wilden from the Resources segment. Various factors impacted the identication and amounts of impairment recognized at the reporting units. These included the current market conditions in terms of size and new product opportunities, current and/or future operating margins and future growth potential relative to expectations when acquired. Of the total goodwill reduction, $148.0 million was from the Diversied segment, $127.5 million was from the Industries Segment and $69.6 million was from the Resources segment. Additionally, the Company completed its reassessment of recognized intangible assets, including trademarks, and adjusted the remaining amortization lives of certain intangibles based on relevant factors.

The Company has elected to annually test for goodwill impairment in the fourth quarter of its scal year, or when there is a signicant change in circumstance. The Company, subsequent to the adoption of SFAS No. 142, has tested the identied reporting units in the fourth quarter of 2004 and 2003, respectively, and has determined that there has been no additional goodwill impairment.

The changes in the carrying value of goodwill by market segment through the year ended December 31, 2004 are as follows: Diversied Industries Resources Technologies Total (In thousands) Balance as of December 31, 2002ÏÏÏÏÏÏÏÏ $398,308 $368,930 $322,941 $537,686 $1,627,865 Goodwill from acquisitionsÏÏÏÏÏÏÏÏÏÏÏÏ Ì 2,914 180,352 1,634 184,900 Other (primarily currency translation) ÏÏ 4,661 4,780 6,588 15,907 31,936 Balance as of December 31, 2003ÏÏÏÏÏÏÏÏ $402,969 $376,624 $509,881 $555,227 $1,844,701 Goodwill from acquisitionsÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 132,757 145,896 278,653 Other (primarily currency translation) ÏÏ 4,370 1,962 2,608 17,486 26,426 Balance as of December 31, 2004ÏÏÏÏÏÏÏÏ $407,339 $378,586 $645,246 $718,609 $2,149,780

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets: December 31, 2004 December 31, 2003 Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Average Life Amount Amortization (In thousands) (In thousands) Trademarks ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 30,960 $ 11,508 29 $ 22,870 $ 9,807 Patents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 98,193 62,199 13 97,015 54,161 Customer intangiblesÏÏÏÏÏÏÏÏÏÏÏÏ 150,784 15,219 9 61,783 6,284 Unpatented technologiesÏÏÏÏÏÏÏÏÏ 127,428 28,521 9 68,141 21,561 Non-compete agreementsÏÏÏÏÏÏÏÏ 9,395 7,853 5 8,875 6,483 Drawings and manuals ÏÏÏÏÏÏÏÏÏÏ 5,989 2,722 5 6,177 2,237 Distributor relationships ÏÏÏÏÏÏÏÏÏ 38,300 1,915 25 38,300 383 OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,450 5,944 14 6,564 3,844 Total amortizable intangible assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $475,499 $135,881 12 $309,725 $104,761 Pension other* ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 40,819 Ì 25,760 Ì Total indenite-lived trademarks 148,840 Ì 144,363 Ì Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $665,158 $135,881 $479,848 $104,761

* Intangible asset balance minimum pension liability requirements related to the Company's Supplemental Executive Retirement Plan Liability.

65 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

The total intangible amortization expense for the twelve months ended December 31, 2004, 2003 and 2002 was $29.4 million, $18.2 million, and $17.8 million, respectively. The estimated amortization expense, based on current intangible balances, for the next ve scal years beginning January 1, 2005 is as follows: (In thousands) 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $25,416 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $24,224 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $23,439 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $21,577 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $20,023

7. Discontinued Operations

In August of 2001, the FASB issued SFAS No. 144, ""Accounting for the Impairment or Disposal of Long-Lived Assets,'' which was eective for scal years beginning after December 15, 2001. SFAS No. 144 establishes accounting and reporting standards for the impairment and disposal of long-lived assets and discontinued operations. The Company elected to adopt early SFAS No. 144 in 2001. The application of this statement results in the classication, and separate nancial presentation, of certain entities as discontinued operations, which are not included in continuing operations. The earnings (loss) from discontinued operations include charges to reduce these businesses to estimated fair value less costs to sell. Fair value is determined by using quoted market prices, when available, or other accepted valuation techniques. All interim and full-year reporting periods have been restated to reect the discontinued operations discussed below.

The Company's executive management performs periodic reviews at all of its operating companies to assess their protability and growth prospects under its ownership based on many factors including end market conditions, nancial viability and their long-term strategic plans. Based upon these reviews, management from time to time has concluded that some businesses had limited growth prospects under its ownership due to relevant domestic and international market conditions, or ongoing nancial viability, or did not align with management's long-term strategic plans.

During 2004, the Company discontinued and sold one business in the Technologies segment in the rst quarter of 2004 and sold ve businesses that had been discontinued in 2003. In 2004, all six businesses were disposed of or liquidated for a net after tax gain of $2.4 million. As of the end of the year, there were no remaining entities held for sale in discontinued operations.

During 2003, the Company discontinued ve businesses, three in the Diversied segment and one business in each of the Industries and Resources segments, all of which were identied as held for sale as of December 31, 2003. In aggregate these businesses were not material to the Company's results.

During 2002, the Company discontinued seven businesses, four in the Technologies segment and three in the Resources segment. In 2002, two of these businesses, one from each of Technologies and Resources were sold for a net after tax loss of $4.5 million. The ve remaining businesses were classied as held for sale as of

66 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

December 31, 2002. In 2003, the ve businesses were disposed of or liquidated for a net after tax gain of $4.9 million.

Results of Discontinued Operations 2004 2003 2002 (In thousands) Net Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $85,093 $146,108 $197,397 Operating earnings (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,546 6,949 (10,798) Earnings (losses) from discontinued operations, net of taxes ÏÏ 1,221 (6,776) (35,217) Gain (losses) on sales of discontinued operations, net of taxes 2,394 14,487 (841) Operating earnings (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 3,615 $ 7,711 $(36,058)

Charges to reduce these discontinued businesses to their estimated fair values have been recorded in losses from discontinued operations net of tax. For the years ended December 31, 2003 and 2002, pre-tax charges were recorded to write-o goodwill of $17.3 million and $31.6 million and other long-lived asset impairments and other charges of $0.2 million and $12.3 million, respectively. In 2004, no such charges to write-o goodwill or impairments to long-lived assets were recorded. During 2003, in connection with the completion of a federal income tax audit and commercial resolution of other issues, the Company adjusted certain reserves established in connection with the sales of previously discontinued operations and recorded a gain on the sales of discontinued operations net of tax of $16.6 million, and additional tax benets of $5.1 million related to losses previously incurred on sales of businesses. These amounts were oset by charges of $13.6 million, net of tax, to reduce discontinued businesses to their estimated fair value, and a loss on the sale of discontinued operations net of tax of $6.0 million related to contingent liabilities from previously discontinued operations. Total losses from discontinued operations in 2002 were primarily related to charges to reduce discontinued businesses to their estimated fair value. The major classes of discontinued assets and liabilities included in the Consolidated Balance Sheets are as follows: 2004 2003 (In thousands) Assets: Current Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 3,214 $102,682 Non-Current AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,607 61,457 Total Assets of Discontinued Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $10,821 $164,139 Liabilities: Current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 5,604 $ 62,706 Long-term liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,220 $ 11,180 Total Liabilities of Discontinued Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $21,824 $ 73,886

The assets primarily consist of residual property, plant and equipment and deferred tax assets. The liabilities relate to short and long-term reserves and contingencies related to businesses previously sold.

8. Restructuring and Inventory Charges During 2002, the Company's segments and operating companies initiated a variety of restructuring programs. These restructuring programs focused on reducing the overall cost structure primarily through

67 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) reductions in headcount and through the disposition or closure of certain non-strategic or redundant product lines and manufacturing facilities. Restructuring charges consist of employee separation and facility exit costs. Restructuring charges for continuing operations were recorded as selling and administrative expenses. The employee separation programs for continuing operations involved approximately 3,700 employees, all of whom had been terminated as of December 31, 2003. The Company had completed the vast majority of restructuring programs undertaken in 2002 by the end of 2003. The remaining exit reserves relate to future lease obligations for facilities that were closed. These costs will be paid over the remaining term of each lease.

2002 Restructuring

In 2002, the Company initiated restructuring programs at selected operating companies with ongoing eorts to reduce costs in the continually challenging business environments in which the Company operates. The total restructuring charges related to these programs in 2002 were $28.7 million. The restructuring charges included both employee separation costs of $11.9 million and costs associated with exit activities of $16.8 million.

The restructuring in Technologies took place in the CBAT and SEC groups, in response to the signicant declines in the end-markets served by these operations. CBAT recorded $6.6 million for employee separation and $11.2 million for exit activities. The majority of the severance and exit costs were incurred at Universal, Everett Charles and DEK. The facility exit costs consist of lease terminations and idle equipment impairments. SEC recorded $2.5 million for employee separation and $3.6 million for facility exit activities. A majority of these costs were incurred at Quadrant and Novacap.

Industries recorded restructuring charges of $3.7 million, of which $2.1 million was incurred to exit an under-performing product line at Tipper Tie. The remaining $1.6 million was for employee separation and other exit costs. Diversied recorded $1.1 million of restructuring charges to rationalize its SWF business, of which $0.8 million was for severance.

The Company recorded pre-tax restructuring charges by business segment for the year ended Decem- ber 31, as follows: 2002 (In thousands) Diversied ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,128 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,724 ResourcesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23,886 Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $28,738

The $1.6 million ending balance in exit costs as of December 31, 2004 represents lease obligations at the Technologies Segment. A reconciliation of restructuring provisions is as follows: Severance Exit Total (In thousands) Ending balance as of December 31, 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 6,219 $ 9,142 $ 15,361 Benets and exit costs paid/write downs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (6,219) (5,455) (11,674) Ending balance as of December 31, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ 3,687 $ 3,687 Benets and exit costs paid/write downs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 2,063 2,063 Ending balance as of December 31, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ 1,624 $ 1,624

68 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

Due to signicant declines in the demand for certain products, special inventory reserves were established in 2002. The following table details the utilization of these reserves by segment through December 31, 2003: Technologies Diversied Resources Total (In thousands) Disposed of through December 31, 2002ÏÏÏÏÏ (25,845) (14,377) (2,500) (42,722) Sold through December 31, 2002ÏÏÏÏÏÏÏÏÏÏÏ (6,444) Ì Ì (6,444) Discontinued Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,997) Ì (913) (3,910) Ending balance as of December 31, 2002 ÏÏÏÏÏÏ $ 15,612 $ Ì $ Ì $ 15,612 Disposed of through December 31, 2003ÏÏÏÏÏ (14,289) Ì Ì (14,289) Sold through December 31, 2003ÏÏÏÏÏÏÏÏÏÏÏ (1,323) Ì Ì (1,323) Ending balance as of December 31, 2003 ÏÏÏÏÏÏ $ Ì $ Ì $ Ì $ Ì

The inventory sold through December 31, 2003 and 2002 has generated pretax prots of approximately $0.05 million and $1.2 million, respectively.

9. Lines of Credit and Debt On September 8, 2004, the Company entered into a $600 million ve-year unsecured revolving credit facility with a syndicate of fteen banks. The Credit Agreement replaced an existing 364-day credit facility and a 3-year credit facility in the same aggregate principal amount and on substantially the same terms and is intended to be used primarily as liquidity back-up for the Company's commercial paper program. As described above, the Credit Agreement has a ve-year term, whereas the prior facilities had respective terms of 364 days and three years and would otherwise have expired in October 2004 and October 2005, respectively. The Company has not drawn down any loan under the Credit Agreement, and does not anticipate doing so, and as of December 31, 2004, had commercial paper outstanding in the principal amount of $65 million. At the Company's election, loans under the Credit Agreement will bear interest at a Eurodollar or alternative currency rate based on LIBOR, plus an applicable margin ranging from 0.19% to 0.60% (subject to adjustment based on the rating accorded the Company's senior unsecured debt by S&P and Moody's), or at a base rate pursuant to a formula dened in the Credit Agreement. In addition, the Company will pay a facility fee and a utilization fee in certain circumstances as described in the Credit Agreement. The Credit Agreement imposes various restrictions on the Company that are substantially identical to those in the replaced facilities. Among other things, the Credit Agreement generally requires the Company to maintain an interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.5 to 1. The Company is and has been in compliance with this covenant and the ratio was 12.6 to 1 as of December 31, 2004, and 9.4 to 1 as of December 31, 2003. The Company established a Canadian Credit Facility in November of 2002 with the Bank of Nova Scotia. Under the terms of this Credit Agreement, the Company has a Canadian (CAD) $30 million bank credit availability and has the option to borrow in either Canadian Dollars or U.S. Dollars (USD). The outstanding borrowings at year-end under this facility were approximately $21 million (CAD) in 2004 and $17 million denominated in USD in 2003. The covenants and interest rates under this facility match those of the primary $600 million revolving credit facility. The Canadian Credit Facility was renewed for an additional year prior to its expiration date of November 25, 2004, and now expires on November 22, 2005. The Company intends to replace the Canadian Credit Facility on or before its expiration date. The primary purpose of this agreement is to facilitate borrowings in Canada for ecient cash and tax planning. Notes payable shown on the consolidated balance sheets for 2004 principally represented commercial paper issued in the U.S. with those shown for 2003 primarily representing short-term borrowings at a foreign

69 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) subsidiary. The weighted average interest for short-term borrowings for the years 2004 and 2003 was 1.3% and 1.1% respectively. Dover's long-term debt instruments had a book value of $1,005.7 million on December 31, 2004 and a fair value of approximately $1,093.0 million. On December 31, 2003, the Company's long-term debt instruments had a book value of $1,007.2 million and a fair value of approximately $1,103.0 million. A summary of the Company's long-term debt for years ended December 31: A Summary of Long-Term Debt is as follows at December 31, 2004 2003 (In thousands) 6.45% Notes due Nov. 15, 2005 (less unamortized discount of $178) with an eective interest rate of 5.09% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 249,873 $ 249,822 6.25% Notes due June 1, 2008 (less unamortized discount of $61) with an eective interest rate of 5.19% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 149,946 149,939 6.50% Notes due Feb. 15, 2011 (less unamortized discount of $485) with an eective interest rate of 6.52% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 399,560 399,516 6.65% Debentures due June 1, 2028 (less unamortized discount of $828) with an eective interest rate of 6.68% ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 199,181 199,171 Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,180 8,731 Total long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,005,740 $1,007,179 Less current installmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 252,677 3,264 Long-term debt excluding current installments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 753,063 $1,003,915

Annual repayments of long-term debt are scheduled as follows: (In thousands) 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 252,677 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,621 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 463 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 150,806 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 600,173 Total Long Term Debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,005,740

The Company may, from time to time, enter into interest rate swap agreements to manage its exposure to interest rate changes. Interest rate swaps are agreements to exchange xed and variable rate payments based on notional principal amounts. As of December 31, 2004, the Company had three interest rate swaps outstanding for a total notional amount of $150.0 million, designated as fair value hedges of the $150.0 million 6.25% Notes due on June 1, 2008, to exchange xed-rate interest for variable-rate interest. There was no hedge ineectiveness as of December 31, 2004, and the aggregate fair value of these interest rate swaps of $0.7 million determined through market quotation was reported in other assets and long-term debt. During the rst quarter of 2004, Dover terminated an interest rate swap with a notional amount of $50.0 million for an immaterial gain, which is being recognized over the remaining term of the debt issuance. This interest rate swap was designated as a fair value hedge of the 6.25% Notes due June 1, 2008. During the second quarter of 2004, Dover entered into an interest rate swap with a notional amount of $50.0 million at more favorable rates to replace the interest rate swap terminated during the rst quarter. This interest rate swap is designated as a fair value hedge of the 6.25% Notes due June 1, 2008. The swap is designated in a foreign currency and exchanges xed-rate interest for variable-rate interest, which also hedges a portion of the Company's net

70 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) investment in foreign operations. Subsequent to December 31, 2004, one interest rate swap with a notional amount of $50.0 million was terminated with no material impact to the Company.

10. Stock Option and Performance Incentive Program On April 25, 1995, the stockholders approved the 1995 Incentive Stock Option and 1995 Cash Performance Program (the ""1995 Plan'') to replace the 1984 Incentive Stock Option and 1984 Cash Performance Program, which expired on January 30, 1995. Under the 1995 Plan, a maximum aggregate of 20 million shares was reserved for grants to key personnel until January 30, 2005. The option price could not be less than the fair market value of the stock at the time the options were granted. The period during which these options were exercisable was xed by the Company's Compensation Committee at the time of grant, but could not commence sooner than three years after the date of grant and could not exceed ten years from the date of grant. On April 20, 2004, the stockholders approved the Dover Corporation 2005 Equity and Cash Incentive Plan (the ""2005 Plan'') to replace the 1995 Plan, which expired on January 30, 2005. Under the 2005 Plan, a maximum aggregate of 20 million shares is reserved for grants (non-qualied and incentive stock options and restricted stock) to key personnel between February 1, 2005 and January 31, 2015, provided that no incentive stock options shall be granted under the plan after February 11, 2014. The option price may not be less than the fair market value of the stock at the time the options are granted. The period during which these options are exercisable is xed by the Company's Compensation Committee at the time of grant, but may not commence sooner than three years after the date of grant and may not exceed ten years from the date of grant. Transactions in stock options (all of which are non-qualied and cli vest three years after grant) under these plans are summarized as follows: Shares Under Exercise Price Weighted Option Range Average Outstanding at January 1, 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,404,269 $ 9.67 - $43.00 $30.68 GrantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,139,792 $27.00 - $38.00 $37.92 Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (380,674) $ 9.67 - $35.00 $16.85 Canceled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (331,004) $29.00 - $43.00 $39.38 Outstanding at December 31, 2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,832,383 $ 9.67 - $43.00 $32.71 Exercisable at December 31, 2002 through February 4, 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,218,919 $11.40 - $35.00 $25.52 Outstanding at January 1, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,832,383 $ 9.67 - $43.00 $32.71 GrantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,521,210 $24.50 - $40.00 $24.58 Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (607,358) $11.40 - $35.00 $17.87 Canceled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (363,153) $ 9.67 - $43.00 $32.55 Outstanding at December 31, 2003 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,383,082 $14.22 - $43.00 $30.99

71 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

Shares Under Exercise Price Weighted Option Range Average Exercisable at December 31, 2003 through February 10, 2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,408,104 $14.22 - $39.00 $29.07 Outstanding at January 1, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,383,082 $14.22 - $43.00 $30.99 GrantedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,248,801 $38.50 - $41.25 $41.25 Exercised ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (697,974) $14.22 - $41.00 $19.50 Canceled ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (319,165) $24.50 - $41.25 $31.68 Outstanding at December 31, 2004 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,614,744 $14.22 - $43.00 $33.98 Exercisable at December 31, 2004 through: February 2, 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 202,548 $14.22 February 8, 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 411,266 $23.53 February 6, 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 528,644 $24.72 February 5, 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 692,761 $35.00 February 4, 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,082,022 $31.00 February 10, 2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 802,069 $39.00 February 8, 2011 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,666,945 $41.00 Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,386,255 $14.22 - $43.00 $33.98

Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Remaining Life Weighted Average Remaining Life Range of Exercise Prices Number Exercise Price in Years Number Exercise Price in Years $14.22-$24.72 ÏÏÏÏÏ 4,311,212 23.95 6.34 1,142,458 22.43 1.39 $27.00-$35.00 ÏÏÏÏÏ 1,816,127 32.49 3.80 1,780,083 32.56 3.72 $35.75-$43.00 ÏÏÏÏÏ 6,487,405 39.99 7.29 2,463,714 40.35 5.78 The Company also has a restricted stock program (as part of the 1995 Plan and the 2005 Plan), under which common stock of the Company may be granted at no cost to certain ocers and key employees. In general, restrictions limit the sale or transfer of these shares during a two or three year period, and restrictions lapse proportionately over the two or three year period. Restricted shares granted in 2004, 2003 and 2002 were 10,000, 6,000, and zero, respectively. In addition, the Company has a stock compensation plan under which non-employee directors are granted shares of Dover's common stock each year as their primary compensation for serving as directors. During 2004, the Company issued an aggregate of 9,120 shares of its common stock to its eight outside directors (after withholding an aggregate of 3,904 additional shares to satisfy tax obligations), as partial compensation for serving as directors of the Company during 2004. During 2003, the Company issued an aggregate of 8,750 shares of its common stock to its seven U.S. resident outside directors (after withholding an aggregate of 3,752 additional shares to satisfy tax obligations), and the Company issued an aggregate of 1,786 shares of its common stock to its non-U.S. resident outside director who was not subject to U.S. withholding tax, as partial compensation for serving as directors of the Company during 2003.

72 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

11. Taxes on Income Total income taxes for the years ended December 31, 2004, 2003 and 2002 were allocated as follows: 2004 2003 2002 (In thousands) Taxes on income from continuing operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $143,006 $86,676 $55,523 Stockholders' equity, for compensation expense for tax purposes in excess of amounts recognized for nancial reporting purposes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4,959) (3,513) (2,597) $138,047 $83,163 $52,926

Income tax expense (benet) is made up of the following components: 2004 2003 2002 (In thousands) Current: U.S. Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 87,849 $ 3,572 $ 5,648 State and localÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,592 3,397 327 Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 46,680 32,005 28,486 Total current Ì continuing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $138,121 $38,974 $34,461 Deferred: U.S. Federal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 6,462 $48,583 $19,487 State and localÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,394 1,422 2,199 Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (3,971) (2,303) (624) Total deferred Ì continuing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,885 47,702 21,062 Total expense Ì continuing ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $143,006 $86,676 $55,523

Income taxes have been based on the following components of earnings before taxes on continuing income: 2004 2003 2002 (In thousands) Domestic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $353,515 $241,512 $202,504 Foreign ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 198,631 130,380 60,865 $552,146 $371,892 $263,369

73 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

The reasons for the dierence between the eective rate and the U.S. Federal income statutory rate of 35% are as follows: 2004 2003 2002 U.S. Federal income tax rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35.0% 35.0% 35.0% State and local taxes, net of Federal income tax benet ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.8 1.9 0.6 Foreign operations tax eect ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4.9) (4.3) 3.5 Subtotal ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30.9 32.6 39.1 R&E tax credits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1.0) (1.3) (2.5) Foreign export program benets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2.8) (3.0) (4.3) Foreign tax credits ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.1) 0.0 (1.1) Branch losses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.8) (1.5) (2.3) Other, reecting settlement of tax contingenciesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.7) (3.4) Ì Other, principally non-tax deductible items ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.4 0.4 0.8 Eective rate before reorganizationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25.9 23.8 29.7 Reorganization of entities and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (0.5) (8.6) Eective rate from continuing operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25.9% 23.3% 21.1%

The tax eects of temporary dierences that give rise to signicant portions of the deferred tax assets and deferred tax liabilities at December 31 of each year are as follows: 2004 2003 (In thousands) Deferred Tax Assets: Accrued insurance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 10,168 $ 4,885 Accrued compensation, principally postretirement benets, and other employee benetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 60,331 42,922 Accrued expenses, principally for disposition of businesses, interest and warranty ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18,535 19,334 Long-term liabilities principally warranty, environmental and exit costs 9,562 12,038 Inventories, principally due to reserves for nancial reporting purposes and capitalization for tax purposesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25,012 23,977 Net operating loss carryforwards ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 46,450 50,845 Accounts receivable, principally due to allowance for doubtful accounts 8,013 7,083 Other assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,581 3,809 Total gross deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 182,652 164,893 Valuation allowanceÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (44,343) (50,845) Total deferred tax assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 138,309 $ 114,048

74 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

2004 2003 (In thousands) Deferred Tax Liabilities: Accounts receivable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (25,734) $ (20,355) Plant and equipment, principally due to dierences in depreciation ÏÏÏÏ (28,389) (22,562) Intangible assets, principally due to dierent tax and nancial reporting bases and amortization lives ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (284,167) (211,222) Prepaid pension assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (48,409) (48,321) Other liabilitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (440) (947) Total gross deferred tax liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (387,139) (303,407) Net deferred tax liabilityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (248,830) (189,359) Net current deferred tax asset ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 47,634 44,547 Net non-current deferred tax liability ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(296,464) $(233,906)

The Company has loss carryovers for federal and foreign purposes as of December 31, 2004, of $50.8 million and $243.7 million, respectively, and as of December 31, 2003, of $24.0 and $289.4 million, respectively. The Company expects to utilize all of the $50.8 million federal loss in the 2001 carry back period. The entire balance of the foreign losses is available to be carried forward, with $49.1 million of these beginning to expire during the years 2005 through 2013. The remaining $194.6 million of such losses can be carried forward indenitely. The Company maintains a partial valuation allowance to reduce the deferred tax assets related to these carry forwards, as utilization of these losses is not assured. The Company has not provided for U.S. federal income taxes or tax benets on the undistributed earnings of its international subsidiaries because such earnings are reinvested and it is currently intended that they will continue to be reinvested indenitely. At December 31, 2004 and 2003, the Company has not provided federal income taxes on earnings of approximately $324.0 million and $223.2 million, respectively, from its international subsidiaries. On October 22, 2004, the President signed the American Jobs Creation Act of 2004 (the ""Act''). The Act creates a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85 percent dividends received deduction for certain dividends from controlled foreign corporations. The deduction is subject to a number of limitations and, as of today, uncertainty remains as to how to interpret numerous provisions in the Act. Therefore, the Company is not yet in a position to decide whether, and to what extent, it might repatriate foreign earnings that have not yet been remitted to the U.S. Based on the Company's analysis to date, however, it is reasonably possible that the Company may repatriate some amount between zero and $176.0 million, with the respective tax liability ranging from zero to $7.8 million. The Company expects to be in a position to nalize its assessment by the third quarter of 2005. Dover is continuously undergoing examination of its federal income tax returns by the Internal Revenue Service (the ""IRS''). The Company and the IRS have settled tax years through 1995. The Company expects to resolve open years (1996-2000) in the near future, all within the amounts paid and/or reserved for these liabilities. The IRS is currently examining the Company's 2001 and 2002 federal income tax returns. Additionally, the Company is routinely involved in state and local income tax audits, and on occasion, foreign jurisdiction tax audits.

12. Commitments and Contingent Liabilities A few of the Company's subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identied under Federal and State statutes which provide for the allocation of such costs among

75 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

""potentially responsible parties.'' In each instance the extent of the Company's liability appears to be very small in relation to the total projected expenditures and the number of other ""potentially responsible parties'' involved and is anticipated to be immaterial to the Company. In addition, a few of the Company's subsidiaries are involved in ongoing remedial activities at certain plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company's products, exposure to hazardous substances or patent infringement, litigation and administrative proceedings involving employment matters, and commercial disputes. Manage- ment and legal counsel periodically review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability and extent of insurance coverage, and established reserves. While it is not possible at this time to predict the outcome of these legal actions or any need for additional reserves, in the opinion of management, based on these reviews, it is remote that the disposition of the lawsuits and the other matters mentioned above will have a material adverse eect on the nancial position, results of operations, cash ows or competitive position of the Company.

The Company leases certain facilities and equipment under operating leases, many of which contain renewal options. Total rental expense, net of insignicant sublease rental income, on all operating leases was $45.7 million, $44.7 million and $43.5 million, for 2004, 2003, and 2002, respectively. Contingent rentals under the operating leases were not signicant.

A summary of the Company's undiscounted long-term debt, commitments and obligations as of December 31, 2004, and the years when these obligations become due is as follows: Total 2005 2006 2007 2008 Thereafter (In thousands) Long-term debt ÏÏÏÏÏÏÏÏ $1,005,740 $252,677 $ 1,621 $ 463 $150,806 $600,173 Rental commitmentsÏÏÏÏ 147,437 36,475 28,715 22,872 14,270 45,105 Purchase Obligations ÏÏÏ 82,858 80,276 1,779 784 19 Ì Capital Leases ÏÏÏÏÏÏÏÏÏ 8,031 3,546 2,619 677 131 1,058 Other Long-Term ObligationsÏÏÏÏÏÏÏÏÏÏ 4,844 762 738 364 360 2,620 Total obligations ÏÏÏÏÏÏÏ $1,248,910 $373,736 $35,472 $25,160 $165,586 $648,956

Long-term debt Ì Long-term debt with a book value of $1,005.7 million had a fair value of approximately $1,093.0 million on December 31, 2004.

Rental Commitments Ì Minimum future rental commitments under operating leases having non- cancelable lease terms in excess of one year aggregate $147.4 million as of December 31, 2004 and are payable as shown in the obligation table.

Purchase Obligations Ì The Company has non-cancelable, contractual obligations to purchase goods or services of $82.9 million as of December 31, 2004. The Technologies segment accounts for $65.1 million of this amount as of December 31, 2004.

Capital Leases Ì The Company leases machinery and equipment under terms which classify them as capital leases. Capital Lease Obligations for the Industries segment and Technologies segment were $6.1 million and $1.8 million, respectively, as of December 31, 2004.

76 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

Warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted for new claims. A reconciliation of the warranty provision is as follows: 2004 2003 (In thousands) Balance at beginning of yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 36,235 $ 32,628 Provision for warranties ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31,038 25,565 Settlements madeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (23,405) (22,693) Other adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,960 735 Balance at end of year, ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 46,828 $ 36,235

13. Employee Benet Plans The Company has dened benet and dened contribution pension plans (the ""Plans'') covering substantially all employees of the Company and its domestic and international subsidiaries. The Plans' benets are generally based on years of service and employee compensation. The Company's funding policy is consistent with the funding requirements of ERISA and applicable foreign law. Dover uses a measurement date of September 30th for its pension and other postretirement benet plans. The Company is responsible for overseeing the management of the investments of the dened benet Plans' assets and otherwise ensuring that the Plans' investment programs are in compliance with ERISA, other relevant legislation, and related plan documents. Where relevant, the Company has retained several professional investment managers to manage the Plans' assets and implement the investment process. The investment managers, in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset classes specied by the terms of their applicable prospectus or investment manager agreements with the Plans. The primary nancial objective of the Plans is to secure participant retirement benets. Accordingly, the key objective in the Plans' nancial management is to promote stability and, to the extent appropriate, growth in funded status. Related and supporting nancial objectives are established in conjunction with a review of current and projected Plan nancial requirements. The assets of the Plans are invested to achieve an appropriate return for the Plans consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds, weighted in the proportions outlined by the asset class exposures identied in the Plans' strategic allocation. The Expected Return on Asset Assumption used for pension expense was developed through analysis of historical market returns, current market conditions, and the past experience of plan asset investments. Estimates of future market returns by asset category are lower than actual long-term historical returns in order to generate a conservative forecast. Overall, it is projected that the investment of Plan assets will achieve an 8.50% net return over time, from the asset allocation strategy. The Company also provides, through non-qualied plans, supplemental pension benets in excess of qualied plan limits imposed by Federal tax law. These plans cover ocers and certain key employees and generally serve to restore and/or enhance the combined pension amount to original benet levels to what they would be absent such limits. These plans are funded from the general assets of the Company. Dover has reected the merger of the Warn plan into the Dover Corporation Pension Plan, eective October 1, 2003. Dover chose to recognize this plan merger using purchase accounting, whereby the unfunded Pension Benet Obligation (""PBO'') as of the merger date was recognized as an accrued cost of $13.7 million. Subsequent to the valuation date of the dened benet plan, Dover made an additional funding of $2.7 million

77 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued) related to Warn in the fourth quarter of 2003, which was not reected in the funded status of the plan as of the measurement date of September 30, 2003.

During 2003, two plan amendments created an increase in the benet obligations of the Company's principal non-qualied supplemental pension benet plan. A change in early retirement factors under the supplemental benet plan allows for employees who are 62 and have 10 years of service with the Company to retire with unreduced benets between the ages of 62 and 65. The second amendment provides partial prior service credit to executives who are hired at or after age 40 and are eligible to participate in this plan.

The following table sets forth the components of the Company's net periodic(expense) benet for 2004, 2003 and 2002. Dened Benets Supplemental Benets Post-Retirement Benets 2004 2003 2002 2004 2003 2002 2004 2003 2002 (In thousands) Expected return on plan assets ÏÏÏÏÏÏÏÏ $ 27,509 $ 23,530 $ 22,564 $ Ì $ Ì $ Ì $ Ì $ Ì $ Ì Benets earned during year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (9,495) (8,117) (6,906) (3,939) (3,113) (2,404) (640) (374) (355) Interest accrued on benet obligation ÏÏÏ (16,629) (14,752) (14,406) (5,985) (4,785) (4,049) (1,755) (1,567) (1,607) Amortization Prior service cost ÏÏÏ (1,126) (982) (879) (3,766) (3,080) (2,300) (338) 24 14 Unrecognized actuarial gains (losses)ÏÏÏÏÏÏÏÏÏ (3,738) (739) Ì (8) (5) Ì (18) 46 86 Transition ÏÏÏÏÏÏÏÏÏ 1,073 1,038 931 Ì ÌÌÌÌÌ Settlement and curtailment gain (loss) ÏÏÏÏÏÏÏÏÏÏ ÌÌÌÌÌÌ1,019 Ì 55 Net periodic (expense) benet ÏÏ $ (2,406) $ (22) $ 1,304 $(13,698) $(10,983) $(8,753) $(1,732) $(1,871) $(1,807)

The assumptions used in determining the net periodic benet (expense) above were as follows: Post-Retirement Dened Benets Supplemental Benets Benets 2004 2003 2002 2004 2003 2002 2004 2003 2002 Weighted average discount rateÏÏÏÏÏÏÏ 6.00% 6.75% 7.25% 6.00% 6.75% 7.25% 6.00% 6.75% 7.25% Average wage increase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.00% 4.00% 4.00% 6.00% 6.75% 6.75% Ì Ì Ì Expected long-term rate of return on plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8.50% 8.50% 9.00% ÌÌÌÌÌÌ Ultimate medical trend rateÏÏÏÏÏÏÏÏÏÏ ÌÌÌÌÌÌ6.00% 6.00% 5.00%

78 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

The funded status and resulting prepaid pension cost of U.S. dened benet plans (international dened benet plans are not considered material) for 2004 and 2003 were as follows: Dened Benets Supplemental Benets Post-Retirement Benets 2004 2003 2004 2003 2004 2003 (In thousands) Change in benet obligation Benet obligation at beginning of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $275,803 $216,668 $ 96,446 $ 54,707 $ 26,013 $ 24,080 Benets earned during the year 9,495 8,117 3,939 3,113 640 374 Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16,629 14,752 5,985 4,785 1,756 1,567 Plan participants' contributions Ì Ì Ì Ì 175 209 AmendmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 963 3,152 26,298 23,764 (1,524) (81) Actuarial loss (gain) ÏÏÏÏÏÏÏÏÏÏ 5,141 25,296 (2,820) 12,257 (135) 2,407 Settlements and curtailments ÏÏÏ Ì Ì Ì Ì (12) Ì Acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 23,800 ÌÌÌÌ Divestitures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,855) Ì ÌÌÌÌ Benets paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (23,301) (15,982) (6,289) (2,179) (2,203) (2,543) Benet obligation at end of year 281,875 275,803 123,559 96,447 24,710 26,013 Change in plan assets Fair value of plan assets at beginning of year ÏÏÏÏÏÏÏÏÏÏÏ 275,969 199,761 ÌÌÌÌ Actual return on plan assets ÏÏÏÏ 38,593 36,310 ÌÌÌÌ Company contributions ÏÏÏÏÏÏÏÏ 2,730 45,780 6,289 2,179 2,028 2,334 Employee contributions ÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 175 209 Benets paid ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (23,301) (15,982) (6,289) (2,179) (2,203) (2,543) Acquisitions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 10,100 ÌÌÌÌ Divestitures ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2,531) Ì ÌÌÌÌ Fair value of plan assets at end of year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 291,460 275,969 ÌÌÌÌ Funded status ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,585 166 (123,559) (96,447) (24,710) (26,013) Unrecognized actuarial (gain) loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 116,627 133,239 112 5,893 1,412 1,577 Unrecognized prior service cost 8,235 8,398 73,804 51,272 (1,042) (198) Unrecognized transition (gain) (2,260) (3,333)ÌÌÌÌ Post Measurement Date Contributions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 927 Ì Ì Ì Prepaid (accrued) benet cost ÏÏ $132,187 $138,470 $ (48,716) $(39,282) $(24,340) $(24,634) Accumulated Benet Obligation $256,905 $249,848 $ 87,425 $ 65,213

Benet payments increased in 2004 and are expected to increase further in 2005. These increases relate in part to benets for key executives with signicant years of service.

79 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

The assumptions used in determining the above were as follows: Supplemental Post-Retirement Dened Benets Benets Benets 2004 2003 2004 2003 2004 2003 Weighted average discount rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5.75% 6.00% 5.75% 6.00% 5.75% 6.00% Average wage increase ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4.00% 4.00% 6.00% 6.00% Ì Ì Ultimate medical trend rateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Ì 5.50% 6.00%

The actual and target weighted-average asset allocation for benet plans were: December September September Current 2004 2004 2003 Target Equity Ì Domestic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 33% 31% 64% 25% - 35% Equity Ì International ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 25% 24% 17% 20% - 25% Fixed Income Ì DomesticÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35% 38% 12% 25% - 40% Real EstateÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7% 7% 7% 5% - 10% OtherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 0% - 10% Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 100% 100% 100%

Information about the expected 2005 employer contributions is as follows: Supplemental Dened Benets Benets (In thousands) Contributions to be made to plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $10,000 Ì Contributions to be made to plan participantsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì $22,471

Information about the expected future undiscounted benet payments, which reect expected future service, is as follows: Supplemental Post Retirement Dened Benets Benets Benets (In thousands) 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 18,134 $22,471 $1,736 2006 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 18,550 10,557 1,663 2007 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 20,794 7,697 1,676 2008 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,525 12,574 1,648 2009 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,111 10,995 1,665 2010-2014 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 123,645 55,110 8,368

Pension cost for all dened contribution and dened benet plans was $32.2 million for 2004, $21.2 million for 2003, and $21.5 million for 2002.

For post-retirement benet measurement purposes, a 12% annual rate of increase in the per capita cost of covered benets (i.e., health care cost trend rates) was assumed for 2004; the rates were assumed to decrease gradually to 5.50% by the year 2012 and remain at that level thereafter. The health care cost trend rate assumption has a signicant eect on the amounts reported. For example, increasing (decreasing) the assumed health care cost trend rates by one percentage point in each year would increase (decrease) the accumulated post-retirement benet obligation as of December 31, 2004, by $1.4 million ($1.4 million) and the net post-retirement benet cost for 2004 by approximately $0.1 million ($0.1 million).

80 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

In December 2003, the Medicare Prescription Drug Improvement and Modernization Act of 2003 was enacted. The Act established a prescription drug benet under Medicare, and a federal subsidy to sponsors of retiree health care benet plans that provide an equivalent benet. The Company believes it will be entitled to a subsidy and has determined the eects of the Act were not a signicant event, and accordingly, net periodic post-retirement benet cost for 2004 does not reect the eects of the Act. The benet of the subsidy will be factored into the 2005 costs and obligations. The post-retirement benet plans cover approximately 2,200 participants, approximately 650 of which are eligible for medical benets. The plans are closed to new entrants.

14. Information About the Company's Operations in Dierent Segments and Geographic Areas Selected information by geographic regions is presented below: For the Years Ended December 31, Revenues Long-Lived Assets 2004 2003 2002 2004 2003 United States ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,021,354 $2,482,651 $2,492,014 $2,826,379 $2,511,251 EuropeÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,176,206 899,615 749,200 728,740 563,733 Other Americas ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 393,829 322,729 281,909 50,580 47,763 Total Asia ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 788,980 631,754 445,968 25,525 22,706 Rest of the World ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 107,743 76,547 84,502 187 279 $5,488,112 $4,413,296 $4,053,593 $3,631,411 $3,145,732 U.S. Exports ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,088,613 $ 890,813 $ 798,806

Revenues are attributed to regions based on the location of the Company's customer, which in some instances is an intermediary and not necessarily the end-user. Long-lived assets are comprised of net property, plant and equipment; intangible assets and goodwill, net of amortization; and other assets and deferred charges. The Company's operating companies are based primarily in the United States of America and Europe. During 2004, as in prior years, the Company's businesses were divided into four reportable segments. Dover's businesses serve thousands of customers, none of which accounted for more than 10% of consolidated revenues. Accordingly, it is impracticable to provide revenues from external customers for each product and service sold by segment. Selected nancial information by market segment follows on the next page:

81 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

SALES, OPERATING PROFIT AND OTHER DATA BY MARKET SEGMENT For the Years Ended December 31, 2004 2003 2002 (In thousands) Sales to unaliated customers: DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,310,835 $1,168,256 $1,115,776 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,221,178 1,039,930 1,034,714 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,337,229 982,658 872,898 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,628,135 1,231,241 1,036,472 Intramarket sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (9,265) (8,789) (6,267) Consolidated continuing salesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,488,112 $4,413,296 $4,053,593 Operating prot: DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 149,779 $ 131,867 $ 127,454 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 138,359 121,200 137,547 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 216,291 136,851 124,380 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 162,198 84,763 (30,339) Interest income, interest expense and general corporate expenses, netÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (114,481) (102,789) (95,673) Consolidated continuing earnings before taxes on income ÏÏÏÏÏ $ 552,146 $ 371,892 $ 263,369 Operating prot margin (pretax): DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.4% 11.3% 11.4% Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11.3 11.7 13.3 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 16.2 13.9 14.2 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.0 6.9 (2.9) Consolidated continuing prot marginÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10.1% 8.4% 6.5% Total assets at December 31: DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,039,044 $ 986,297 $ 926,176 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 962,218 937,944 882,597 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,507,741 1,247,510 805,970 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,906,381 1,478,807 1,327,284 Corporate (principally cash and equivalents and marketable securities) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 365,974 344,815 336,691 Total continuing assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,781,358 $4,995,373 $4,278,718 Assets from discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10,821 164,139 158,398 Consolidated total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $5,792,179 $5,159,512 $4,437,116 Depreciation and amortization: DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 35,928 $ 37,270 $ 36,466 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,188 28,173 28,059 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 45,884 34,911 36,027 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 50,757 49,931 55,076 Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,088 1,024 1,318 Consolidated continuing total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 160,845 $ 151,309 $ 156,946 Capital expenditures: DiversiedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 24,699 $ 24,473 $ 23,914 Industries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 22,616 22,509 23,089 Resources ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,453 16,372 16,067 Technologies ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 32,346 31,496 32,944 Corporate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 320 1,550 403 Consolidated continuing total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 107,434 $ 96,400 $ 96,417

82 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)

15. Quarterly Data (Unaudited)

Gross Continuing Net Per Share(1) Quarter Net Sales(1) Prot(1) Net Earnings(1) Earnings Basic Diluted (In thousands, except per share gures) 2004 First ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,242,380 $ 435,865 $ 83,809 $ 83,113 $0.41 $0.41 Second ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,380,360 483,741 109,667 112,264 0.54 0.53 Third ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,444,196 494,608 116,858 120,264 0.58 0.58 Fourth ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,421,176 480,150 98,806 97,114 0.48 0.48 $5,488,112 $1,894,364 $409,140 $412,755 $2.01 $2.00 2003 First ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 998,373 $ 347,618 $ 57,688 $ 59,470 $0.28 $0.28 Second ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,094,000 378,562 71,591 72,782 0.35 0.35 Third ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,122,909 383,274 75,235 84,356 0.37 0.37 Fourth ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,198,014 410,968 80,702 76,319 0.41 0.40 $4,413,296 $1,520,422 $285,216 $292,927 $1.41 $1.40

All quarterly and full-year periods have been restated to reect certain operations that were discontinued. The quarterly data presented above will not agree to previously issued quarterly statements made as a result of this restatement.

(1) Represents results from continuing operations.

83 DOVER CORPORATION SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS Years Ended December 31, 2004, 2003, 2002

Balance at Acq. By Charged to Balance at Beginning of Purchase Cost and Accounts Credit to Close of Year or Merger Expense Written O Income Year Year Ended December 31, 2004 Allowance for Doubtful Accounts ÏÏÏ $31,998 $2,679 $ 7,869 $ (6,064) $(3,725) $32,757 Year Ended December 31, 2003 Allowance for Doubtful Accounts ÏÏÏ $30,174 $1,047 $ 8,705 $ (6,719) $(1,209) $31,998 Year Ended December 31, 2002 Allowance for Doubtful Accounts ÏÏÏ $33,652 $ 123 $12,057 $(10,838) $(4,820) $30,174

Charged, Balance at (Credited) to Balance at Beginning of Cost and Close of Year Expense Year Year Ended December 31, 2004 Lifo ReserveÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $29,642 $12,304 $41,946 Year Ended December 31, 2003 Lifo ReserveÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $30,407 $ (765) $29,642 Year Ended December 31, 2002 Lifo ReserveÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $29,372 $ 1,035 $30,407

Acquired Balance at By Balance at Beginning of Purchase Close of Year or Merger Additions Reductions Other Year Year Ended December 31, 2004 Deferred Tax Valuation Allowance $50,845 $9,411 $ 1,707 $(21,896) $4,276 $44,343 Year Ended December 31, 2003 Deferred Tax Valuation Allowance $30,086 Ì $20,518 $ (8,651) $8,892 $50,845 Year Ended December 31, 2002 Deferred Tax Valuation Allowance $33,680 Ì $ 5,502 $(11,815) $2,719 $30,086

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

Item 9A. Controls and Procedures At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Ocer, Chief Operating Ocer and Chief Financial Ocer, of the eectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15e. Based upon that evaluation, the Chief Executive Ocer and Chief Financial Ocer concluded that the Company's disclosure controls and procedures were eective to ensure that material information required to be disclosed by the Company in the reports it les under the Exchange Act is recorded, processed, summarized and reported within the required time periods. During the fourth quarter of 2004, there were no changes in the Company's internal control over nancial reporting that have materially aected, or are reasonably likely to materially aect, the Company's internal control over nancial reporting.

84 Management's Report on Internal Control Over Financial Reporting The management of the Company is responsible for establishing and maintaining adequate internal control over nancial reporting as such term is dened in Exchange Act Rule 13a-15(f). The Company's management assessed the eectiveness of the Company's internal control over nancial reporting as of December 31, 2004. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment under the criteria set forth in Internal Control-Integrated Framework, management concluded that, as of December 31, 2004, the Company's internal control over nancial reporting was eective to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of nancial statements for external purposes in accordance with generally accepted accounting principles. Management has excluded SSE GmbH, Flexbar, Rasco, Voltronics, US Synthetics, Corning Frequency Control, Almatec and Datamax from its assessment of internal control over nancial reporting as of December 31, 2004 because they were acquired by the Company in purchase business combinations during 2004. These companies are wholly-owned by the Company and their total revenues and assets represent less than 3% and 11% of the Company's consolidated total revenues and assets, respectively, as reected in its nancial statements for the year ended December 31, 2004. Because of its inherent limitations, internal control over nancial reporting may not prevent or detect misstatements and cannot provide absolute assurance of achieving nancial reporting objectives. Projections of any evaluation of eectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management's assessment of the eectiveness of the Company's internal control over nancial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting rm, as stated in their report which appears herein.

Item 9B. Other Information Certications Regarding Public Disclosures and Listing Standards The unqualied certications of the Chief Executive Ocer and the Chief Financial Ocer required by Section 302 of the Sarbanes-Oxley Act regarding the quality of Dover's public disclosure are led with the Securities and Exchange Commission as Exhibits 31.1 and 31.2 to the Annual Reports on Form 10-K for the years ended December 31, 2004 and December 31, 2003. In addition, the annual certication of the Chief Executive Ocer regarding compliance by the Company with the corporate governance listing standards of the New York Stock Exchange was submitted without qualication to the New York Stock Exchange following the April 2004 annual stockholder meeting.

PART III

Item 10. Directors and Executive Ocers of the Registrant The information with respect to the directors of the Company required to be included pursuant to this Item 10 is included under the caption ""1. Election of Directors'' in the 2005 Proxy Statement relating to the 2005 Annual Meeting of Stockholders led with the Securities and Exchange Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934, as amended, and is incorporated in this Item 10 by reference. The information with respect to the executive ocers of the Company required to be included pursuant to this Item 10 is included under the caption ""Executive Ocers of the Registrant'' in Part I of this Annual Report on Form 10-K and is incorporated in this Item 10 by reference. The information with respect to Section 16(a) reporting compliance required to be included in this Item 10 is included under the caption ""Section 16(a) Benecial Ownership Reporting Compliance'' in the 2005 Proxy Statement and is incorporated in this Item 10 by reference.

85 The Company has adopted a code of ethics that applies to its chief executive ocer and senior nancial ocers. A copy of this code of ethics can be found on the Company's website at www.dovercorporation.com. In the event of any amendment to, or waiver from, the code of ethics, the Company will publicly disclose the amendment or waiver by posting the information on its website.

Item 11. Executive Compensation The information with respect to executive compensation required to be included pursuant to this Item 11 is included under the caption ""Executive Compensation'' in the 2005 Proxy Statement and is incorporated in this Item 11 by reference.

Item 12. Security Ownership of Certain Benecial Owners and Management The information regarding security ownership of certain benecial owners and management that is required to be included pursuant to this Item 12 is included under the caption ""Security Ownership of Certain Benecial Owners and Management'' in the 2005 Proxy Statement and is incorporated in this Item 12 by reference.

EQUITY COMPENSATION PLANS The Equity Compensation Plan Table below presents information regarding the Company's equity compensation plans at December 31, 2004: (a) (b) (c) Number of Securities Remaining Available Number of Securities Weighted-Average for Future Issuance to be Issued upon Exercise Price of Under Equity Exercise of Outstanding Compensation Plans Outstanding Options, Options, Warrants (Excluding Securities Plan Category Warrants and Rights and Rights Reected in Column (a)) Equity compensation plans approved by stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,584,584 $33.42 5,135,186 Equity compensation plans not approved by stockholders ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,584,584 $33.42 5,135,186 The Company has three compensation plans under which equity securities of the Company have been authorized for issuance and have been issued to employees and to non-employee directors. These plans are described below. The table above does not reect shares eligible for issuance under the 2005 Equity and Cash Incentive Plan, which became eective on February 1, 2005, or under the 1996 Non-Employee Directors' Stock Compensation Plan, which does not specify a maximum number of shares issuable under it.

The 1995 Incentive Stock Option Plan and 1995 Cash Performance Program The Company's 1995 Incentive Stock Option Plan and 1995 Cash Performance Program (the ""1995 Plan''), adopted in 1995 (replacing the 1984 Plan which expired in January 1995), provided for stock options, restricted stock awards and cash performance awards. The 1995 Plan expired in January 2005, but the options listed in Column A of the table above remain outstanding under it. The 1995 Plan was intended to promote the medium-term and long-term success of Dover by providing salaried ocers and other key employees of Dover and its subsidiaries with medium-range and long-range inducements to remain with Dover and to encourage them to increase their eorts to make Dover successful. Options granted under the 1995 Plans were all designated as non-qualied stock options. The exercise price of options is the fair market value on the date of grant as determined in good faith by the Compensation Committee. The Compensation Committee determines the term of each option but in no event may an option become exercisable sooner than the third anniversary of its grant date or be exercised

86 more than 10 years following the grant date. No more than 600,000 shares may be granted to a single participant in any one year. Options granted under this plan may not be sold, transferred, hypothecated, pledged or otherwise disposed of by any of the holders except by will or by the laws of descent and distribution except that a holder may transfer any non-qualied option granted under this plan to members of the holder's immediate family, or to one or more trusts for the benet of such family members provided that the holder does not receive any consideration for the transfer. The information above summarizes the material aspects of the 1995 Plan. The rights and obligations of participants are determined by the provisions of the plan document itself.

The 2005 Equity and Cash Incentive Plan The Company's 2005 Equity and Cash Incentive Plan (the ""2005 Plan'') was approved by the shareholders of the Company on April 20, 2004. The 2005 Plan became eective on February 1, 2005, and replaced the 1995 Plan, which expired on January 30, 2005, and is intended to allow the Company to continue to provide to key personnel the types of rewards available under the 1995 Plan. Participation in the 2005 Plan is limited to a group of salaried ocers and other key employees of Dover and its subsidiaries who are in a position to aect materially the protability and growth of the Company and its subsidiaries and on whom major responsibility rests for the present and future success of the Company. The Board of Directors and management believe that the 2005 Plan will provide these key employees with medium-range and long-range inducements to remain with Dover and to encourage them to increase their eorts to make Dover and its subsidiaries successful. The 2005 Plan provides for stock option grants, and restricted stock and cash incentive awards. Options granted under the 2005 Plan may be either non-qualied stock options or incentive stock options within the meaning of Section 422 of the Internal Revenue Code. Options will have a term not exceeding ten years and will become exercisable after not less than three years. The option exercise price will be xed by the Compensation Committee and may be equal to or more than (but not less than) the ""fair market value'' of such shares on the date the option is granted. No single recipient may be granted options for more than 600,000 shares in any year. Generally, stock options are not transferable, except for non-qualied options which may be transferred to members of the holder's immediate family (or a trust for the benet of one or more of such family members), except that such transferred options cannot be further transferred by the transferee during the transferee's lifetime. The information above summarizes material aspects of the 2005 Plan. The rights and obligations of participants are determined by the provisions of the plan document itself.

The 1996 Non-Employee Directors' Stock Compensation Plan The Dover Corporation 1996 Non-Employee Directors' Stock Compensation Plan (the ""Directors' Plan''), provides the primary compensation to non-employee directors of the Company for their service as directors. Through the end of 2002, non-employee directors were granted 2,000 shares of the Company's common stock per year (adjusted for stock splits). If any director served for less than a full calendar year, the number of shares granted to that director for the year was adjusted pro rata, based on the number of calendar quarters for such year for which he or she served as a director. The Directors' Plan was amended eective January 1, 2003, as approved by the stockholders. As amended, it provides for dierent levels of stock grants in 2003 and beyond. Directors receive annual compensation in an amount set from time to time by the Board, payable partly in cash and partly in common stock, subject to adjustment by the Board of Directors of the compensation amount and allocation, and the Directors' Plan's limitations on the maximum number of shares that may be granted to any Director. Annual compensation for 2004 was $90,000, payable 25% in cash and 75% in common stock, and was paid by $22,500 in cash and 1,628 shares, based on the fair market value of common stock on November 15, 2004. On November 4, 2004, the Board of Directors approved the recommendations of its Compensation Committee to (1) increase the annual compensation of non-employee directors from $90,000 to $120,000, eective January 1, 2005 and (2) decrease the percentage of such compensation paid in stock from 75% to 60%, with a corresponding increase in the amount of such compensation paid in cash from 25% to 40%. If any Director serves for less than a full calendar year, the Compensation Committee will prorate the Director's compensation for the year (including the number of

87 shares to be granted) as the Committee deems appropriate. The shares granted under the Directors' Plan may be treasury shares or newly issued shares, but in either case they will be listed on the New York Stock Exchange.

The information above summarizes the material aspects of the Directors' Plan. The rights and obligations of participants are determined by the provisions of the plan document itself.

Item 13. Certain Relationships and Related Transactions

The information with respect to any reportable transaction, business relationship or indebtedness between the Company and the benecial owners of more than 5% of the Common Stock, the directors or nominees for director of the Company, the executive ocers of the Company or the members of the immediate families of such individuals that is required to be included pursuant to this Item 13 is included under the caption ""1. Election of Directors Ì Directors' Compensation'' in the 2005 Proxy Statement and is incorporated in this Item 13 by reference.

Item 14. Principal Accountant Fees and Services

The information set forth under the caption ""Relationship with Independent Registered Public Account- ing Firm'' in the 2005 Proxy Statement is incorporated in this Item 14 by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements

Financial Statements covered by the Report of Independent Registered Public Accounting Firm:

(A) Consolidated Statements of Earnings (Losses) for the years ended December 31, 2004, 2003 and 2002.

(B) Consolidated Balance Sheets as of December 31, 2004 and 2003.

(C) Consolidated Statements of Stockholders' Equity and Comprehensive Earnings (Losses), for the years ended December 31, 2004, 2003, 2002.

(D) Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002.

(E) Notes to consolidated nancial statements.

(2) Financial Statement Schedule

The following nancial statement schedule is included in Item No. 8 of this report on Form 10-K:

Schedule II Ì Valuation and Qualifying Accounts

All other schedules are not required and have been omitted.

(3) Not covered by the Report of Independent Registered Public Accounting Firm:

Quarterly nancial data (unaudited)

(4) See (b) below.

88 (b) Exhibits: (3)(i) Restated Certicate of Incorporation, led as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the Period Ended June 30, 1998 (SEC File No. 001-04018), is incorporated by reference. (3)(ii) Certicate of Correction to the Restated Certicate of Incorporation dated as of January 24, 2003, led as Exhibit 3(i) to the Company's Current Report on Form 8-K led February 28, 2003 (SEC File No. 001-04018), is incorporated by reference. (3)(iii) By-Laws of the Company, led as Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q for the Period Ended September 30, 2004 (SEC File No. 001-04018), are incorporated by reference. (4.1) Amended and Restated Rights Agreement, dated as of November 15, 1996, between Dover Corporation and Harris Trust Company of New York, led as Exhibit 1 to Form 8-A/A dated November 15, 1996 (SEC File No. 001-04018), is incorporated by reference. (4.2) Indenture, dated as of June 8, 1998 between Dover Corporation and The First National Bank Chicago, as Trustee, led as Exhibit 4.1 to the Company's Current Report on Form 8-K led June 12, 1998 (SEC File No. 001-04018), is incorporated by reference. (4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate principal amount), led as Exhibit 4.3 to the Company's Current Report on Form 8-K led June 12, 1998 (SEC File No. 001- 04018), is incorporated by reference (4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000 aggregate principal amount), led as Exhibit 4.4 to the Company's Current Report on Form 8-K led June 12, 1998 (SEC File No. 001- 04018), is incorporated by reference. (4.5) Form of Indenture, dated as of November 14, 1995 between the Company and The First National Bank of Chicago, as Trustee, relating to the 6.45% Notes due November 15, 2005 (including the form of the note), led as Exhibit 4 to the Company's Registration Statement on Form S-3 (SEC File No. 33-63713), is incorporated by reference. (4.6) Form of 6.50% Notes due February 15, 2011 ($400,000,000 aggregate principal amount), led as Exhibit 4.3 to the Company's current report on Form 8-K led February 12, 2001 (SEC File No. 001-04018), is incorporated by reference. (4.7) Indenture, dated as of February 8, 2001 between the Company and BankOne Trust Company, N.A., as trustee, led as Exhibit 4.1 to the Company's current report on Form 8-K led February 12, 2001 (SEC File No. 001-04018), is incorporated by reference. (4.8) Ocers' certicate, dated February 12, 2001, pursuant to Section 301 of the Indenture, dated as of February 8, 2001 between the Company and BankOne Trust Company N.A., as trustee, led as Exhibit 4.2 to the Company's current report on Form 8-K led February 12, 2001 (SEC File No. 001-04018), is incorporated by reference. The Company agrees to furnish to the Securities and Exchange Commission upon request, a copy of any instrument with respect to long-term debt under which the total amount of securities authorized does not exceed 10 percent of the total consolidated assets of the Company. (10.1) Employee Savings and Investment Plan, led as Exhibit 99 to Registration Statement on Form S-8 (SEC File No. 33-01419), is incorporated by reference.* (10.2) Amended and Restated 1996 Non-Employee Directors' Stock Compensation Plan (Revised through January 1, 2005).* (10.3) Executive Ocer Annual Incentive Plan, included as Exhibit A to the Proxy Statement, dated March 17, 2003 (SEC File No. 001-04018), is incorporated by reference.* (10.4) Form of Executive Severance Agreement, led as Exhibit 10.6 to Annual Report on Form 10-K for year ended December 31, 1998 (SEC File No. 001-04018), is incorporated by reference.* (10.5) 1995 Incentive Stock Option Plan and 1995 Cash Performance Program, as amended May 6, 2004.* (10.6) Deferred Compensation Plan, as amended as of December 31, 2001, led as Exhibit 10 to the Company's Current Report on Form 8-K led February 28, 2002 (SEC File No. 001-04018), is incorporated by reference.*

89 (10.7) 2005 Equity and Cash Incentive Plan, included as Exhibit B to the Proxy Statement dated March 10, 2004 (SEC File No. 001-04018), is incorporated by reference.* (10.8) Form of award grant letters for grants made under 2005 Equity and Cash Incentive Plan.* (10.9) US $600,000,000 Five-Year Credit Agreement dated as of September 8, 2004, led as Exhibit 99.1 to the Company's Current Report on Form 8-K led September 14, 2004 (SEC File No. 001- 04018), is incorporated by reference. (10.10) Consulting agreement dated December 8, 2004, between Dover Corporation and Jerry W. Yochum. (10.11) Summary of arrangement eective January 1, 2005, between Dover Corporation and Thomas L. Reece. (10.12) Supplemental Executive Retirement Plan (Revised through October 13, 2004).* (14) Dover Corporation Code of Ethics for Chief Executive Ocer and Senior Financial Ocers, led as Exhibit 14 to the Company's Annual Report on Form 10-K for year ended December 31, 2003 (SEC File No. 001-04018) is incorporated by reference. (18) Letter of Preferability regarding a change in accounting principle, led as Exhibit 18 to the Company's Annual Report on Form 10-K for year ended December 31, 2003 (SEC File No. 001-04018) is incorporated by reference. (21) Subsidiaries of Dover. (23.1) Consent of Independent Registered Public Accounting Firm. (24) Power of Attorney (included in signature page). (31.1) Certication pursuant to Rule 13a-15(e) and 15d-15(e)) and internal control over nancial reporting (as dened in Exchange Act Rules 13a-15(f) and 15d-15(f)) of the Securities and Exchange Act of 1934, as amended, signed and dated by Robert G. Kuhbach. (31.2) Certication pursuant to Rule 13a-15(e) and 15d-15(e)) and internal control over nancial reporting (as dened in Exchange Act Rules 13a-15(f) and 15d-15(f)) of the Securities and Exchange Act of 1934, as amended, signed and dated by Ronald L. Homan. (32) Certication pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections(a) and(b) of section 1350, chapter 63 of title 18, United States Code), signed and dated by Robert G. Kuhbach and Ronald L. Homan.

* Executive compensation plan or arrangement. (d) Not applicable.

90 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.

DOVER CORPORATION

By: /s/ RONALD L. HOFFMAN Ronald L. Homan President and Chief Executive Ocer

Date: March 14, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Each of the undersigned, being a director or ocer of Dover Corporation (the ""Company''), hereby constitutes and appoints Ronald L. Homan, Robert G. Kuhbach and Joseph W. Schmidt, and each of them (with full power to each of them to act alone), his or her true and lawful attorney-in-fact and agent for him or her and in his or her name, place and stead in any and all capacities, to sign the Company's Annual Report on Form 10-K for the scal year ended December 31, 2004 under the Securities Exchange Act of 1934, as amended, and any and all amendments thereto, and to le the same with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission and any other appropriate authority, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing required and necessary to be done in and about the premises in order to eectuate the same as fully to all intents and purposes as he or she might or could do if personally present, hereby ratifying and conrming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. Signature Title Date

/s/ THOMAS L. REECE Chairman, Board of Directors March 14, 2005 Thomas L. Reece

/s/ RONALD L. HOFFMAN Chief Executive Ocer, President March 14, 2005 Ronald L. Homan and Director (Principal Executive Ocer)

/s/ ROBERT G. KUHBACH Vice President, Finance and Chief March 14, 2005 Robert G. Kuhbach Financial Ocer and Treasurer (Principal Financial Ocer)

/s/ RAYMOND T. MCKAY, JR. Vice President, Controller March 14, 2005 Raymond T. McKay, Jr. (Principal Accounting Ocer)

/s/ DAVID H. BENSON Director March 14, 2005 David H. Benson

/s/ ROBERT W. CREMIN Director March 14, 2005 Robert W. Cremin

91 Signature Title Date

/s/ JEAN-PIERRE M. ERGAS Director March 14, 2005 Jean-Pierre M. Ergas

/s/ KRISTIANE C. GRAHAM Director March 14, 2005 Kristiane C. Graham

/s/ JAMES L. KOLEY Director March 14, 2005 James L. Koley

/s/ RICHARD K. LOCHRIDGE Director March 14, 2005 Richard K. Lochridge

/s/ BERNARD G. RETHORE Director March 14, 2005 Bernard G. Rethore

/s/ GARY L. ROUBOS Director March 14, 2005 Gary L. Roubos

/s/ MICHAEL B. STUBBS Director March 14, 2005 Michael B. Stubbs

/s/ MARY A. WINSTON Director March 14, 2005 Mary A. Winston

92 EXHIBIT INDEX

(3)(i) Restated Certicate of Incorporation, led as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the Period Ended June 30, 1998 (SEC File No. 001-04018), is incorporated by reference. (3)(ii) Certicate of Correction to the Restated Certicate of Incorporation dated as of January 24, 2003, led as Exhibit 3(i) to the Company's Current Report on Form 8-K led February 28, 2003 (SEC File No. 001-04018), is incorporated by reference. (3)(iii) By-Laws of the Company, led as Exhibit 3(ii) to the Company's Quarterly Report on Form 10-Q for the Period Ended September 30, 2004 (SEC File No. 001-04018), are incorporated by reference. (4.1) Amended and Restated Rights Agreement, dated as of November 15, 1996, between Dover Corporation and Harris Trust Company of New York, led as Exhibit 1 to Form 8-A/A dated November 15, 1996 (SEC File No. 001-04018), is incorporated by reference. (4.2) Indenture, dated as of June 8, 1998 between Dover Corporation and The First National Bank Chicago, as Trustee, led as Exhibit 4.1 to the Company's Current Report on Form 8-K led June 12, 1998 (SEC File No. 001-04018), is incorporated by reference. (4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate principal amount), led as Exhibit 4.3 to the Company's Current Report on Form 8-K led June 12, 1998 (SEC File No. 001- 04018), is incorporated by reference. (4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000 aggregate principal amount), led as Exhibit 4.4 to the Company's Current Report on Form 8-K led June 12, 1998 (SEC File No. 001- 04018), is incorporated by reference. (4.5) Form of Indenture, dated as of November 14, 1995 between the Company and The First National Bank of Chicago, as Trustee, relating to the 6.45% Notes due November 15, 2005 (including the form of the note), led as Exhibit 4 to the Company's Registration Statement on Form S-3 (SEC File No. 33-63713), is incorporated by reference. (4.6) Form of 6.50% Notes due February 15, 2011 ($400,000,000 aggregate principal amount), led as Exhibit 4.3 to the Company's current report on Form 8-K led February 12, 2001 (SEC File No. 001-04018), is incorporated by reference. (4.7) Indenture, dated as of February 8, 2001 between the Company and BankOne Trust Company, N.A., as trustee, led as Exhibit 4.1 to the Company's current report on Form 8-K led February 12, 2001 (SEC File No. 001-04018), is incorporated by reference. (4.8) Ocers' certicate, dated February 12, 2001, pursuant to Section 301 of the Indenture, dated as of February 8, 2001 between the Company and BankOne Trust Company N.A., as trustee, led as Exhibit 4.2 to the Company's current report on Form 8-K led February 12, 2001 (SEC File No. 001-04018), is incorporated by reference. The Company agrees to furnish to the Securities and Exchange Commission upon request, a copy of any instrument with respect to long-term debt under which the total amount of securities authorized does not exceed 10 percent of the total consolidated assets of the Company. (10.1) Employee Savings and Investment Plan, led as Exhibit 99 to Registration Statement on Form S-8 (SEC File No. 33-01419), is incorporated by reference.* (10.2) Amended and Restated 1996 Non-Employee Directors' Stock Compensation Plan (Revised through January 1, 2005).* (10.3) Executive Ocer Annual Incentive Plan, included as Exhibit A to the Proxy Statement, dated March 17, 2003 (SEC File No. 001-04018), is incorporated by reference.* (10.4) Form of Executive Severance Agreement, led as Exhibit 10.6 to Annual Report on Form 10-K for year ended December 31, 1998 (SEC File No. 001-04018), is incorporated by reference.* (10.5) 1995 Incentive Stock Option Plan and 1995 Cash Performance Program, as amended May 6, 2004.* (10.6) Deferred Compensation Plan, as amended as of December 31, 2001, led as Exhibit 10 to the Company's Current Report on Form 8-K led February 28, 2002 (SEC File No. 001-04018), is incorporated by reference.* (10.7) 2005 Equity and Cash Incentive Plan, included as Exhibit B to the Proxy Statement dated March 10, 2004 (SEC File No. 001-04018), is incorporated by reference.* (10.8) Form of award grant letters for grants made under 2005 Equity and Cash Incentive Plan.* (10.9) US $600,000,000 Five-Year Credit Agreement dated as of September 8, 2004, led as Exhibit 99.1 to the Company's Current Report on Form 8-K led September 14, 2004 (SEC File No. 001- 04018), is incorporated by reference. (10.10) Consulting agreement dated December 8, 2004, between Dover Corporation and Jerry W. Yochum. (10.11) Summary of arrangement eective January 1, 2005, between Dover Corporation and Thomas L. Reece. (10.12) Supplemental Executive Retirement Plan (Revised through October 13, 2004).* (14) Dover Corporation Code of Ethics for Chief Executive Ocer and Senior Financial Ocers, led as Exhibit 14 to the Company's Annual Report on Form 10-K for year ended December 31, 2003 (SEC File No. 001-04018) is incorporated by reference. (18) Letter of Preferability regarding a change in accounting principle, led as Exhibit 18 to the Company's Annual Report on Form 10-K for year ended December 31, 2003 (SEC File No. 001-04018) is incorporated by reference. (21) Subsidiaries of Dover. (23.1) Consent of Independent Registered Public Accounting Firm. (24) Power of Attorney (included in signature page). (31.1) Certication pursuant to Rule 13a-15(e) and 15d-15(e)) and internal control over nancial reporting (as dened in Exchange Act Rules 13a-15(f) and 15d-15(f)) of the Securities and Exchange Act of 1934, as amended, signed and dated by Robert G. Kuhbach. (31.2) Certication pursuant to Rule 13a-15(e) and 15d-15(e)) and internal control over nancial reporting (as dened in Exchange Act Rules 13a-15(f) and 15d-15(f)) of the Securities and Exchange Act of 1934, as amended, signed and dated by Ronald L. Homan. (32) Certication pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections(a) and(b) of section 1350, chapter 63 of title 18, United States Code), signed and dated by Robert G. Kuhbach and Ronald L. Homan.

* Executive compensation plan or arrangement.

(d) Not applicable. IBC

Board of Directors Officers

David H. Benson1, 3 Thomas L. Reece Ronald L. Hoffman David J. Ropp Senior Advisor, Chairman of the Board President & Vice President; Chief Executive Officer President & Chief Fleming Family & Partners 1 Bernard G. Rethore Executive Officer, Robert W. Cremin2 Chairman of the Board Emeritus, Ralph S. Coppola Dover Resources, Inc. Chairman, President Flowserve Corporation Vice President; President & Timothy J. Sandker and Chief Executive 4 Officer, Esterline Gary L. Roubos Chief Executive Officer, Vice President; Technologies Corporation Retired Chairman of the Board Dover Systems, Inc. President & Chief of Dover Corporation, Executive Officer, Jean-Pierre M. Ergas2 Director, ProQuest Company; Robert G. Kuhbach Dover Industries, Inc. Chairman and Omnicom Group, Inc. Vice President, Finance, Chief Financial Officer & Treasurer Joseph W. Schmidt Chief Executive Officer, 1 BWAY Corporation Michael B. Stubbs Vice President, Private Investor Robert A. Livingston General Counsel 2, 3 Vice President; & Secretary Kristiane C. Graham 1 Private Investor Mary A. Winston President & Chief Executive Vice President, Executive Officer, William W. Spurgeon Ronald L. Hoffman Chief Financial Officer, Dover Electronics, Inc. Vice President; President & Scholastic Corporation President & Chief Chief Executive Officer Raymond T. McKay, Jr. Executive Officer, Vice President, Controller Dover Diversified, Inc. James L. Koley1, 3 John E. Pomeroy Robert A. Tyre Director and Former Chairman, 1 Arts-Way Manufacturing Co., Inc. Member of Audit Committee Vice President; Vice President, 2 Member of Compensation President & Chief Executive Officer, Corporate Development 2 Committee Dover Technologies International, Inc. Richard K. Lochridge 3 President, Member of Governance & Lochridge & Company, Inc. Nominating Committee George Pompetzki 4 Retiring April 2005 Vice President, Taxes

Shareholder Information

Investor Inquiries and Corporate News Shareholder Services For quarterly earnings releases, information on conference calls and webcasts, For help with any of the following, please contact Mellon Investor Services: press releases, annual reports, SEC filings including Form 10-K, acquisitions, supplemental financial disclosure, and all other corporate news releases, please • Address Changes • Lost dividend checks • Stock transfers visit our website at www.dovercorporation.com • Direct deposit • Lost stock certificates • IRS Form 1099 of dividends • Name Changes • Direct Stock Dividends • Dividend reinvestment • Shareholder records Purchase Plan Quarterly dividends on Dover Corporation common stock are typically paid on or about the 15th of March, June, September and December. Dover has paid Mellon Investor Services can be reached at the following address: dividends since 1955. Via Regular Mail: What is Dover’s Ticker Symbol? Mellon Investor Services, LLC Dover’s ticker symbol is DOV. The stock trades on the New York Stock Exchange P.O. Box 3315 and is one of the corporations listed in the S&P 500. South Hackensack, NJ 07606-1915 Phone (888) 567-8341 Annual Shareholders Meeting www.melloninvestor.com The Annual Meeting of Shareholders will be held on Tuesday, April 19, 2005 at 10:00 a.m. (local time) at the Wilmington Trust Company in Wilmington, DE. Registered or Overnight Mail: Mellon Investor Services, LLC Independent Registered Public Accounting Firm: Overpeck Center PricewaterhouseCoopers LLP 85 Challenger Road New York, New York Ridgefield Park, NJ 07660 Phone (888) 567-8341 Executive Offices: www.melloninvestor.com Dover Corporation 280 Park Avenue New York, New York 10017-1292 (212) 922-1640

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